Home » Labor market: Unemployment increased slightly – And these numbers point to a decline

Labor market: Unemployment increased slightly – And these numbers point to a decline

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Labor market: Unemployment increased slightly – And these numbers point to a decline

Unemployment rose in December. As the Federal Employment Agency (BA) announced, the number of unemployed rose by 31,000 to 2.637 million people in the last month of last year. Year-on-year there is an increase of 183,000, the rate is now 5.7 percent. The weak economy in 2023 “has not left its mark on the labor market,” says BA boss Andrea Nahles.

However, given the extent of the stress and uncertainty, the German labor market is holding up well, said the head of the authority. The increase is “normal for the season”. Overall, the past year was one of the years with the lowest unemployment since reunification. The Federal Ministry of Labor also draws a positive conclusion: “The labor market is proving to be reliable and resilient,” it says.

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Other indicators, however, point to a more profound and crisis-like development. A repeated increase was recorded in short-time work and underemployment stands at 3.48 million people – 171,000 more than a year ago.

The number of citizens’ benefit recipients also increased throughout the year, and Labor Minister Hubertus Heil (SPD) had to increase the costs by several billion euros in the fall. In December there were 3,932,000 recipients – an increase of 95,000 compared to the same month last year. In addition, 833,000 people received unemployment benefits in December, 91,000 more than a year ago.

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The number of unemployed people has grown by a double-digit percentage, especially in the economically strong federal states of Bavaria, Hamburg and Baden-Württemberg. However, the number of people who took part in labor market policy measures has fallen: there were 698,000 people in 2023 – there were 17,000 fewer subsidies than in the previous year and even 176,000 fewer than in the pre-Corona year 2019.

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The question therefore remains open as to how citizens’ money will work in the new year. “In this way we get people into work sustainably,” Heil emphasized several times. Long-term qualifications are particularly important, as the majority of long-term unemployed people have no vocational training.

Authority boss Nahles, on the other hand, even expects that long-term unemployment will continue to rise in 2024. “Since we currently have no economic tailwind, I have to assume that the situation on the labor market will not automatically improve.”

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45.9 million employees

This is surprising because economists consider the labor market to be very receptive despite the crisis – even for low-skilled jobs. The Chamber of Industry and Commerce (DIHK) has 1.8 million job vacancies.

The development in the capital is exemplary: “In Berlin we continue to see an increase in employment and job notifications,” says the head of the Berlin-Brandenburg regional directorate, Ramona Schröder. More than 19,700 vacancies were reported in Berlin last month; the unemployment rate is 9.2 percent.

Willingness to hire remains high despite crisis

In Baden-Württemberg the number of unemployed is also rising slightly again. “There is a risk of another year of negative gross domestic product or, at best, mini-growth. The labor market, which was able to withstand the downturn for a long time, is also increasingly showing signs of weakness,” says the general manager of the umbrella organization for entrepreneurs in Baden-Württemberg (UBW), Oliver Barta.

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The employment barometer from the Munich ifo Institute shows that the willingness to hire remains high despite the crisis. “At the moment, service providers in particular are looking for new staff,” says Klaus Wohlrabe, head of ifo surveys.

In industry, on the other hand, companies are planning to get by with fewer staff. “This applies to almost all industrial sectors,” says Wohlrabe. Hiring is primarily taking place in the IT industry and tourism, but layoffs are to be expected in the catering industry.

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Temporarily no citizen’s benefit if you refuse to work

Anyone who repeatedly refuses to take a job should not receive citizen’s benefit for a certain period of time in the future. This is what a bill by Hubertus Heil (SPD) provides for. While Finance Minister Lindner and politicians from the SPD and Union welcome the move, the Jusos and the Left warn of severe social consequences.

How the situation on the labor market will develop in 2024 also depends on the financing of the Federal Agency and the job centers. As part of the budget savings, the government is demanding money back from the BA: 5.2 billion euros in total.

The sum was used as a subsidy to pay out the billions of short-time workers during the Corona years. Now, according to criticism, the money will subsequently be converted into a loan. “Nothing happens without moss,” said authority boss Andrea Nahles back in the summer.

The critical but friendly tone towards the traffic light government has changed: angrily Nahles recently questioned the reliability of the federal government in general.

The BA’s coffers are almost empty after the Corona years

“This intervention in the contribution budget not only limits our ability to act in the future, it also puts a strain on our confidence in reliable cooperation with the federal government in the event of possible future crises,” said the former SPD leader.

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The problem: BA’s coffers are almost empty after the Corona years. Now the Federal Agency actually wanted to start building up reserves again for future crises. This will probably not be fully possible in 2024, said Nahles.

There is also criticism of the traffic light course from business. “The fact that the federal government is now planning to consolidate its budget with the help of billions in transfers from the Federal Employment Agency is simply the wrong approach,” says Barta. He criticized the social security funds as “not a self-service store run by the federal government.” This pushes the problems into the future.

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