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Germany: Unemployment rate drops unexpectedly

Germany: Unemployment rate drops unexpectedly

Germany’s authorities have reported an unexpected fall of unemployment in November. As The Local Germany has learned, the labour market reacted to the restrictions in a special way.

In Germany, the official data showed Tuesday that unemployment rate drops despite the nationwide coronacrisis. The restrictions aimed to curb the second virus wave have unexpectedly caused a jump in the number of people on short-time work in Europe’s top economy.

In November, as the BA federal labour agency says, the seasonally adjusted jobless rate in Germany ticked down to 6.1 percent from 6.2 percent in October. Additionally, analysts had expected the unemployment rate to climb slightly to 6.3 percent in November.

In Germany, COVID-19 pandemic caused many economic effects, one of them is rising of short-time employment’s popularity. The BA data showed that another 537,000 people were placed on short-time employment (Kurzarbeit) between Nov 1 and 25, joining millions of other citizens.

“The labour market reacted to the restrictions in November — but
fortunately not with an increase in redundancies at the moment,” BA chairman Detlef Scheele explained.

Another round of lockdown showed that the employers rely more heavily on a subsidised scheme that allows them to reduce workers’ hours. Especially in bars, pubs, restaurants and cafes.

In other words, the November labour market picture could suggest that the German labour market is able to go through the coronacrisis almost unharmed. However, the rising number of short-time workers, as well as the longer-term impact from the second lockdown, clearly argue against the excessive optimism.

To help small and medium businesses, Chancellor Angela Merkel has declared special financial programmes. The German government has pledged billions of euros in extra support for the firms worst hit by the renewed shutdowns. In reality, it may not be enough to prevent a wave of insolvencies, the experts say.

In a pre-COVID era, Germany’s unemployment rate used to be at a record low of around five percent.