Germany’s labor market shrugs off eurozone crisis

Germany’s labor market shrugs off eurozone crisis

FRANKFURT - Agence France-Presse
Germany’s labor market shrugs off eurozone crisis

A man leaves the job center in the northern German town of Neubrandenburg in November. Unemployment in the country dropped to lowest level in twenty years. AFP Photo

German labor market shrugged off the eurozone debt crisis and unemployment dropped to its lowest level in 20 years last year, new data showed yesterday.

“The labor market continued to develop positively at the end of 2011 and we can look back on a good year, when unemployment dropped sharply, employment increased and demand for labor remained very high throughout the whole year,” said the head of the Federal Labor Agency, Frank Weise.

Taking 2011 as a whole, the jobless total fell by 263,000 to 2.976 million in nominal or unadjusted terms, equivalent to 0.6-percent decline in the jobless rate to an annual average 7.1 percent, the agency said.

Both the jobless total and the jobless rate were therefore at their lowest level since unification in 1991, noted German Economy Minister Philipp Roesler.

“2011 can be described as the most successful since German unification for working people,” Roesler said.

“Demand for labor remains very high, despite the current economic risks. Overall, the upturn in employment should continue, albeit at a slower rate. The labor market remains one of the main pillars of our economy,” the minister said.

The day before, the national statistics office Destatis calculated that the number of employed people in Germany hit a new record of 41.04 million in 2011, with more than half a million jobs created last year.
It was the first time the number of people working in Germany has risen above the 41-million mark, Destatis said. The population of the country is nearly 82 million.

Looking at jobless data, the unemployment total actually increased slightly in raw or unadjusted terms in December.

Economists point out, however, that unemployment tends to rise in the winter months as sectors such as the construction sector slow down and lay off workers due to the cold weather.

Adjusted for such seasonal factors, the numbers actually showed a monthly decrease of 22,000 to 2.888 million, according to separate data calculated by the Bundesbank.

The seasonally-adjusted jobless rate slipped to 6.8 percent in December -- the lowest level since 1991 -- from 6.9 percent in November.

“The German labor market has remained in fairly good shape in spite of the ongoing debt crisis and the cooling in global growth,” said Barclays Capital economist, Thorsten Polleit.

Natixis economist Felix Eschwege saw the data as “very good news” for the German economy, Europe’s biggest, and said the data “make us confident with our scenario of an unemployment rate of 6.7 percent for the whole of 2012.”

Heinrich Bayer at Postbank Research predicted a “tangible tailing off of upward momentum” on the labor market in 2012.

“Weak growth at the turn of the year will have left its mark,” he said.

“Nevertheless, the German labor market will remain relatively robust and, in spite of all the crisis talk, 2012 will prove to be another record year for the labour market, both in terms of unemployment and employment.”

Timo Klein at IHS Global Insight was somewhat more cautious.

“Milder-than-usual winter conditions probably helped December data additionally, so that it should still be expected that the economic slowdown observed since about mid-2011 will be reflected in less benign numbers during 2012,” he said.

Nevertheless, “overall, labor market conditions will remain markedly healthier in Germany than in most other countries in Europe in the months ahead,” the analyst said.