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2021: Rate is falling despite the summer break
Unemployment figures in Germany
with other European countries, Germany seems to have low
unemployment figures. But in spring 2020, uncertainty
arose about the further development on the labour market and of
the whole economy as the country was hit by the lockdown to tackle
the Corona pandemic. Although first measures to ease the situation
came into effect in April, unemployment rose in that month and
later. Normally a seasonal upturn is typical for springtime, but
then observers spoke about the beginning of the "mother of all
In Germany in November 2020, a new "lockdown light" began in order to reduce the number of infections with the Corona virus. These measures included among others the closure of gastronomy, tourism industry and leisure activities. But with the approach of the cold season, the number of infections was rising. Calls for the sharpening of the measures became louder and on December 16th, a new lockdown started. Now even shops had to close unless they sold products essential for the daily life. This second lockdown was longer than the first one. In many parts of Germany, business returned to normality not before late spring 2021, depending on the local situation. In summer 2021, German politicians want to avoid another lockdown. A high rate of vaccinated people seems to be the way out of the pandemic. Now the country is beginning to be touched by the fourth wave caused by the delta variant. But the number of infected people needing inpatient treatment is lower than during the earlier waves. New restrictions will depend on the situation in the hospitals.
German politicians are proud of having kept the unemployment at a comparatively low level by the use of short-time working arrangements. When such an arrangement is made, the working hours of an employee are reduced and the employee may benefit from short-time working allowance paid by the public unemployment insurance. This support normally amounts to 60% or 67% of the difference between the wage in the time with reduced working hours and the wage in times of regular work. Those beneficiaries are not included in the number of unemployed people. But we should consider that German law even allows the reduction of working time to zero. Such a reduction does not prevent the granting of this aid. But the real amount of people out of work is being hidden.
In July 2021, approximately 2.590 million men and women were without work in Germany, a country with a population of approximately 83 million people. The number of unemployed men and women fell by 24,000 compared with the previous month and by 320,000 compared with July 2020. The official unemployment rate provided by the German Federal Employment Agency (Bundesagentur für Arbeit) is 5.6%. From January 2014 to October 2019, the monthly unemployment rate was lower than the rate in the corresponding month a year ago. There was no difference in the rate from November 2019 to March 2020. After a long time, April 2020 is the first month with a higher rate than twelve months ago. Now the impact of the virus on the labour market is weakening. The rate of July 2021 is 0.7 percentage points lower than a year ago, but by 0.6 percentage points still higher than 24 months ago.
The methods used by the German employment agency are different from the standards used by the International Labour Organization (ILO). If the concept of the ILO is used, the unemployment rate is 3.7% according to the ILO standards in June 2021.
"The situation on the labour market continues to improve. Unemployment and underemployment continued to fall strongly despite the start of the summer break. Employment growth continues. And companies are increasingly looking for new staff", Detlef Scheele, head of the board of the Federal Employment Agency, says while presenting the figures for the seventh month of 2021.
to the German Federal Statistical Office, 44.84 million people
were in gainful employment in Germany in June 2021 (a plus
of 162,000 compared with June 2020). In May 2021, 33.73
million people had a job that was subject to social insurance
contributions, the agency told (a plus of 402,000 compared with
In July 2021, the Federal Employment Agency registered 744,000 job vacancies, 171,000 more than a year ago.
The underemployment was at 3.379 million people, 294,000 more than last year's July. "Underemployed" people are not only "unemployed" people but for example also persons who take part in employment market policy relieving measures or job-seekers who have a part-time work (but workers with reduced working-hours are not included). (Source: press release nr. 29/2021 of the Federal German Employment Agency of 2021-07-29).
Who is unemployed?
In Germany, a job seeking person is unemployed if she or he is able to work, does not work 15 hours a week or longer and is registered as an "unemployed" person at the local labour agency's office or job centre. The unemployed person must look for an occupation that lasts at least 15 hours a week. Further on, only a person who has not yet reached the retirement age and is not on sick leave can be "unemployed". The unemployed must be willing to work and accept any work, he or she has not the right to accept only a work that is similar to the previous one. An unemployed person who is 58 years old or more and receives welfare benefits for at least 12 months and has not got a job offer by the labour agency will not be counted as "unemployed".
Picture above: View of the Brandenburg Gate in Berlin (CC BY-SA 3.0, size reduced, author: Berthold Werner). In July 2021, the unemployment rate in the capital of Germany was 9.9%, 0.9 percentage points less than a year ago. (Source: Press release of the Regionaldirektion Berlin-Brandenburg of the Bundesagentur für Arbeit of 2021-07-29).
Picture above: The headquarters of the German Federal Employment Agency in Nuremberg. (CC BY-SA 3.0, size reduced, author: Achates).
|Two social security
benefits for unemployed persons
In Germany, there are principally two different social security systems for unemployed workers. The first one is an obligatory insurance system that includes all working persons who earn a wage of more than 450 euro a month. Contributions to the insurance against unemployment are paid by employers and employees half. In 2021, the monthly sum for this insurance is 2.4% of the monthly gross income. For example: someone gets a gross wage of 2,000 euro a month. The employee has to pay 24 euro a month and the employer too. The sum paid by the employer is additional to the gross income, the employer transfers the entire contribution to the social security authorities. For receiving unemployment money, an unemployed person must have paid contributions for at least twelve months in the last two years. The period for which unemployment money will be paid depends on the time an unemployed person has paid contributions. If someone has paid contributions for not longer than twelve months, the benefit will expire after six months, if someone has paid contributions for 24 months, the beneficiary will get this support for a maximum of twelve months. Longer periods are applicable for older unemployed men and women. The unemployment money will replace 60% of the net income of the last twelve months before unemployment (it will be 67% if the unemployed person or his or her partner cares for a child).
The other social security benefit for unemployed people is called Arbeitslosengeld II ("unemployment money 2") which has replaced the former welfare (in German: "Sozialhilfe") for those who are mentally and physically able to work. Therefore the unemployment benefit derived from the unemployment insurance system is often called "Arbeitslosengeld I" (unemployment money 1). "Arbeitslosengeld II" is being financed by the general tax revenue. For a single person, it amounts to 446 euro in 2021 or, for partners, to 401 euro for each partner. Children living with their parents receive 283 euro until they are six years old, 309 euro until 14 years and 373 euro until 18 years. Children from 18 to 25 years staying with their parents get 357 euro. Most other incomes will be taken into account with "unemployment money 2", especially child benefit (in German: "Kindergeld"). In addition, the costs for appropriate housing including heating will be covered. Both unemployment benefits will be paid if an unemployed man or woman gets only little unemployment money that does not secure his livelihood.
In July 2021, 805,000 million unemployed persons were supported financially by the unemployment insurance system, 303,000 less than last year's July (Source: press release nr. 13/2021 of the Federal German Employment Agency of 2021-07-29).
Figures for the entire year 2020 in Germany
In January 2021, the German Federal Labour Agency published the unemployment figures for the entire year 2020. In that year, an average of 2.695 million persons were registered as unemployed in Germany, the average unemployment rate was 5.9% (compared with 2019: a plus of 429,000 and a plus of 0.9 percentage points).
"The collapse of the labour market in spring is still having an impact. The consequences of the Corona pandemic and the measures taken to contain it continue to be very evident. However, the stabilising effect of short-time work has secured employment and prevented higher unemployment", Detlef Scheele said, chairman of the Executive Board of the German Employment Agency. The year 2020 is characterized by the increased use of short-time work. It reached a historical peak in April 2020 with almost six million people in short-time work which meant that 18% of all employees subject to social insurance contributions were affected. In the economic crisis of 2008/2009 the peak was only at 1.4 million. Notably the hotel and the restaurant sectors used short-time work. At an average, workers in short-time lost 38% of their work-time, this loss can be compensated partially by short-time working allowance. The situation on the labour market recovered simultaneously with the relaxations in summer but lost speed in the course of the year. As face to face meetings with the clients were reduced, the Labour Agency offered a wider range of e-services and telephonic reachability. (Source: Press release nr. 2 of the Bundesagentur für Arbeit of 2021-01-05).
|Unemployment in Europe
in recent months (according to Eurostat, the statistical
office of the European Union, seasonally adjusted)
The ways Eurostat uses for calculating the unemployment rate differ from the standards used by the German Federal Employment Agency (see below). It is estimated that 14.916 million men and women were unemployed in the European Union in June 2021. The number of unemployed persons fell by 487,000 compared with May 2021 and fell by 397,000 compared with June 2020. The unemployment rate of the entire EU was 7.1%, 0.2 percentage points lower compared both with the previous month and June 2020.
Younger job seekers: In the entire EU, 2.967 million young people under 25 years of age were unemployed. The average youth unemployment rate was 17.0%. The highest rates were found in Spain with 37.1%, in Greece with 30.4%, Italy with 29.4%, followed by Portugal with 27.7% and Sweden with 25.3%. Czechia had the lowest rate with 7.1%, followed by Germany with 7.5%, the Netherlands with 7.6% and then Malta with 7.7%. (Source: Press release of Eurostat nr. 89 of 2021-07-30).
In times of the Corona pandemic, short-time working allowance becomes more important. Its purpose is to avoid unemployment. Employees who benefit from this financial support are not registered as "unemployed" and are not included in the monthly unemployment rate. When the demand for the company's products or services shrinks, the employer may reduce the working-time of the staff. Short-time working allowance now comes as a compensation for the loss of wage caused by the reduction. The help paid by the Federal Labour Agency generally replaces 60% of the difference between the wage paid during regular working time and the wage paid in times with reduced working time. For those who care for a child, 67% will be granted. As a relief in the pandemic, short-time working allowance was raised to 70% from the fourth month and to 80% from the seventh month of receiving this benefit (77% or 87% in case of parents). The German social security system also allows the reduction of working time to zero hours. It does not hinder this support from being granted if the employer is willing to call back the employee after the crisis.
Employees cannot apply themselves for this benefit, but their employer can do so. The company must submit a written report to the local office of the Labour Agency by the end of the first month in which short-time working allowance should be paid. From July 1 to July 25, the Labour Agency received notices for short-time working for approximately 75,000 employees. In May 2021, short-time working allowance was paid to 2.23 million employees. The number is falling. It reached its peak in April 2020 with nearly six million beneficiaries. (Source: press release nr. 29/2021 of the Federal German Employment Agency of 2021-07-29).
Whenever a company introduces short-time working, the employer pays both the reduced wage and the short-time working allowance to the employees. After this, the employer sends a payroll list with the names of the workers with reduced working time to the Labour Agency. This must happen within three months. The agency checks the documents and pays the allowance to the company. By this procedure, the agency is unable to announce the actual number of people who benefit from this support together with the publication of the unemployment figures. Short-time working is generally limited to twelve months. As a further help in the pandemic, the limitation has been prolonged to 24 months but not longer than the 31 December 2021 if the beneficiary has initially been entitled to this support in 2020.
Unemployment among foreigners
Unemployment among foreigners is higher than among Germans. In July 2021, approximately 648,000 foreigners were registered as "unemployed" which means that nearly every third unemployed person is not a German (32.6%). (Source: Statistik der Bundesagentur für Arbeit, Berichte: Blickpunkt Arbeitsmarkt – Monatsbericht zum Arbeits- und Ausbildungsmarkt, Nürnberg, Tabellenanhang zum Monatsbericht Juli 2021 page 53).
According to the German Federal Statistical Office, 12.6% of the German population were foreigners at the end of June 2020. (Source: Press release nr. 404/20 of the German Federal Statistical Office of 2020-10-13).