There is negative to zero unemployment

Long ways of German unity

Silke Röbenack

Dr. Silke Röbenack is a research associate at the Institute for Sociology at the Friedrich-Alexander University Erlangen-Nuremberg. She conducts research on works councils, among other things.

How has the number of unemployed changed since reunification? What are the differences between East and West? And which developments can be traced?

(& copy picture-alliance, ZB)

The history

In the Federal Republic of Germany, the number of unemployed had risen dramatically since the mid-1970s and in the 1980s was almost consistently over 2.2 million (Federal Employment Agency 2019a). The shortage of energy and raw materials (oil crises) in connection with a global growth crisis and increasing international competition ended the stable high economic growth of the post-war period and also full employment. The "end of the working society" was already forecast at that time (Dahrendorf 1983; Offe 1983). In the course of the structural change from an industrial to a service society, successful efforts to improve technology and rationalization in the German economy, and deregulation processes conducive to business, there was once again a significant economic upswing from the mid-1980s, albeit with a comparatively low increase in the volume of work (Frerich / Frey 1996). Despite slight declines in economic phases and considerable labor market policy efforts, unemployment, which has meanwhile been structurally determined, has solidified. In addition to mass unemployment, long-term unemployment became a permanent problem: in 1988 around 33 percent of all unemployed were unemployed for more than a year (Frerich / Frey 1996, 164ff.). At the same time, a specific structure of unemployment emerged: Certain groups of people such as older and younger people, women, people with health restrictions, the low-skilled and foreigners were more frequently affected by employment risks (ibid., 165; Offe / Hinrichs 1977).

Development of unemployment in the unification process - a success story?

In 1990 the West German "crisis of the labor society" initially turned into an East German one, because the unification-related economic situation in the early 1990s and the boom in the "New Economy" from the mid / late 1990s only led to an economic upswing and employment growth in West Germany (Statistical Offices of the federal and state governments 2012, 7). The East German working society, a "working culture" (Dathe 1995, 6) or a "working-class society" (Engler 2000) preserved in several respects since the 1950s, faced a structural change that was as complex as it was radical in 1990: transition to the market economy and Change from an industrial to a service society paired with an enormous technical and technological catching up process. Within a short period of time (up to 1992) more than 1 million people in East Germany had become unemployed and between 1997 and 2006 almost every fifth East German of working age was without gainful employment.
Unemployment and unemployment rate in East and West Germany over time (based on all civilian labor force). ( Graphic for download) License: cc by-nc-nd / 3.0 / de /

In 2019, thirty years after the fall of the Berlin Wall and almost 15 years after the all-time high unemployment rate in 2005, the average unemployment rate for Germany is around 5 percent and has thus more than halved; Above all, however, the gap between western Germany (4.5 percent) and eastern Germany (6.0 percent) has steadily narrowed in recent years (see Figure 1).

Behind this story of rapprochement lies a radical structural break and a long process of restructuring the economic and employment system in East Germany, which was anything but linear and lasted longer than many had hoped, but ultimately resulted in a successful rapprochement between East Germany and West German labor market conditions. Three phases of this labor market and unemployment development in eastern Germany can be distinguished.

1. Unemployment in transition in East Germany from 1990 to 1997/1998

With the economic and monetary union on July 1, 1990, the East German industrial labor society was confronted - or better said - overtaxed, practically "overnight" with productivity and profitability requirements, catching up on mechanization and rationalization as well as tertiaryization. The structural change and modernization process of the East German economy was first and foremost a radical deindustrialization process, combined with massive job cuts and restructuring (Vogel 1999): The number of employees in East Germany fell from around 9.8 million in autumn 1989 to 6.7 million at the end of 1991 (Federal Labor Office 1992, 776). With around one million registered unemployed on average in 1991, unemployment was nevertheless significantly lower than feared - thanks to extensive subsidies and transfer payments: first there was a significant reduction in the labor force potential [1] through early retirement and age transition regulations, Secondly The job cuts were slowed down by subsidizing the companies (liquidity loans or loan guarantees) as well as extensive employment policy instruments (so-called "short-time work zero" [2], job creation measures, integration grants, so-called waiting loop regulation in the public service), third full-time training and retraining have reduced the level of registered unemployment and fourth also relaxed the flow of commuters and emigrants from east to west Germany the east German labor market (Bundesanstalt für Arbeit 1992, 775ff.). According to estimates (Bundesanstalt für Arbeit 1992, 781, 792), the (employment) policy instruments alone relieved the East German labor market by around 1.8 to 1.9 million people in the labor force on average in 1991 - plus around 400,000 east-west commuters. The extent of underemployment in East Germany, i.e. the deficit in regular employment, averaged around 3.157 million in 1991 (Bundesanstalt für Arbeit 1992, 781) and was significantly higher than the unemployment statistics of the Bundesanstalt für Arbeit.

As early as 1991, specific social inequalities with regard to the employment risk became apparent, which quickly approximated the structural patterns of unemployment in western Germany. For example, East German women were initially affected by job cuts in all economic sectors in a similar way as men, but had a significantly lower chance of taking up a new job (Bundesanstalt für Arbeit, 814; Nickel / Schenk 1996, 262). They benefited to a lesser extent than men from company induction grants, job creation measures (36 percent) or short-time work (45 percent) and were therefore more frequently (58 percent of all unemployed on an annual average in 1991) and longer (44 as opposed to 32 weeks) unemployed (Federal Employment Agency 1992, 815). The disproportionate reduction in administrative and service areas in industrial companies, in which predominantly women were employed, but also displacement and closure processes led to a significant reduction in the proportion of women in almost all branches of industry within a short period of time (Bundesanstalt für Arbeit 1992, 813; Nickel / Schenk 1996, 265f.). The increase in employment in a few service areas that had previously been dominated by women, such as banks and insurance companies (by 58% in 1991), again benefited men in particular (Bundesanstalt für Arbeit 1992, 803, 815). The labor market situation of East German women deteriorated further in the following years and reached its peak in 1997 with an unemployment rate of 20.6 percent (see Figure 2).
Unemployment rates of men and women in East and West Germany over time (based on all civilian labor force). (Download graphic) License: cc by-nc-nd / 3.0 / de /

Other groups of people who have been so-called problem groups with significant placement barriers in West Germany since the 1980s (older people, younger people and foreigners) were not disproportionately affected by unemployment in 1991/92 due to the funding policy at the time: Older employees could take advantage of regulations such as early retirement or age transition benefit which significantly minimized their share of the unemployed (around 3 percent in 1991) (Bundesanstalt für Arbeit 1992, 772). By 1998, however, the proportion of older people (55 to under 65 years of age) among all unemployed in eastern Germany rose to 20.3 percent and thus approached the western German pattern (23.3 percent of all unemployed) (Federal Employment Agency 2019a).

Younger East Germans (15 to under 25 years of age) initially benefited from a relatively balanced market for apprenticeships (Bundesanstalt für Arbeit 1992, 819), but their situation also deteriorated noticeably: in 1998 the unemployment rate (based on dependent civilian workers) in this age group was 17 .4 percent and thus only slightly below the East German average, but more than seven percentage points above the unemployment rate for this age group in West Germany (see Table 1). Unemployment among foreigners played a subordinate role in 1991; in 1989 only a few foreigners with temporary work permits were employed in the companies (approx. 90,000), most of whose employment was terminated prematurely by political ordinances (Dahm / Wahse 1996, 31). This changed fundamentally by the mid / end of the 1990s, for example the unemployment rate of foreigners (based on dependent civilian labor force) in East Germany was around 33 percent, around 14 percentage points higher than that of East Germans (18.8 percent) in 1998 (cf. Table 1).

With regard to the qualification level, the same applies as in West Germany: the higher the formal qualification, the lower the labor market risk. In 1991 the highest unemployment rate was measured at around 28.6 percent among people with no training or with partial training, followed by skilled workers with 13.9 percent and academics with just under 5.9 percent. The occupational groups also showed different employment risks early on: an increase in the number of unemployed was registered between the end of 1990 and 1991 in all occupational groups - an average increase of 131 percent, but below average in some occupational groups (construction trades by 50 percent, engineers and natural scientists by 62 Percent), but above average in many manufacturing occupations (for example chemical workers / plastics processors by 226 percent, metal occupations by 218 percent). If the latter was understandable due to the structural change from an industrial to a service society and the technical-technological modernization process, the 148 percent increase in unemployment across all service professions is not immediately apparent. Two factors played a role here: firstly, there was generally too little self-sustaining employment growth - especially in the production-related service sector (Dahms / Wahse 1996), and secondly, the extensive employment promotion through economic and labor market policy in the first few years came primarily from industry and in particular commercial ones Areas (Bundesanstalt für Arbeit 1992, 786f., 791ff.).

The regional disparities with regard to the spread of unemployment were still relatively small in 1991 (lower than in western Germany, see Table 3). They became more pronounced in the following years: while in 1998 the unemployment rates in Thuringia (17.1 percent), Saxony (17.5 percent) and Brandenburg (17.6 percent) were below the average unemployment rate in eastern Germany (17.8 percent ), it was highest in Saxony-Anhalt at 20.4 percent (see Table 2).
For this first phase up to around 1998 it can be said that the subsidized reduction in the number of jobs and the promotion of employment did not increase unemployment in eastern Germany to the same extent as the decline in employment. That changed fundamentally in the following years, which was related to various factors: Employment-stabilizing funding instruments [3] expired or were withdrawn (Bundesregierung 1998, 25), the Treuhandanstalt ended its work, the hoped-for involvement of West German corporations was limited to the establishment of so-called . Extended workbenches, a self-sustaining increase in employment in a newly emerging medium-sized industry or in the service sector took place only very slowly, and East Germany was also barely able to participate in the employment boom of the New Economy (Bundesregierung 1997, 72ff. and 1998, 16ff.). By 1998, the number of people in employment in East Germany fell to just under 6 million (Bundesregierung 1998, 18), while unemployment rose to over 1.5 million or 17.8 percent (see Figure 1). With the increase in unemployment, the proportion of long-term unemployed also rose from 23.2 percent in 1992 to 27.8 percent in 1997 (Bundesanstalt für Arbeit 1998, 145).

2. Stagnation, consolidation of unemployment and increasing disparities from 1998 to 2005

Between 1997/98 and 2005 the unemployment rate in eastern Germany stagnated at around 18 percent and between 1999 and 2004 was more than twice as high as in western Germany (see Figure 1). Employment and economic development could not compensate for the sustained structural disadvantages of the East German economy as well as the low economic growth (Bundesregierung 1998, 25ff .; Bundesregierung 2006, 16, 152). It is true that since the mid / late 1990s, medium-sized industrial companies and companies of West German corporations have settled in some regions of East Germany, and former GDR companies slowly built up employment again. Nevertheless, the number of people in employment fell to 5.58 million in 2005 (Bundesregierung 2006, 149). At the same time, the average number of unemployed in 2005 reached a high of 1,614,154 people (18.7 percent); the proportion of long-term unemployed in July 2005 was almost 44 percent (Bundesregierung 2005, 150).

The structure of East German unemployment with regard to certain groups of people, however, continued to approximate that of West Germany - but at a consistently higher level. In 2005, younger workers in eastern Germany and western Germany were unemployed above average, but in eastern Germany this age group was almost twice as likely (see Table 1). The share of older people (55 to under 65 years of age) among all unemployed, however, fell to 11.4 percent and, similar to that in West Germany (12.3 percent), has almost halved compared to 1998 (Federal Employment Agency 2019a), but this was primarily the case strong incentives to exit working life prematurely (Eichhorst / Sproß 2005). The group of foreigners with an unemployment rate of 45 percent was relatively hardest hit by unemployment (see Table 1).

Since the end of the 1990s, the unemployment rates of East German men and women have gradually converged and were the same for the first time in 2003 at 18.5 percent (see Figure 2). However, it was a "precarious adjustment" (Völker 2005, 52): While the labor market crisis in the course of the shrinking construction industry and economic weakness from the end of the 1990s increasingly affected men than women and led to an increase in the unemployment rate for men, East Germans have Women withdrew from the labor market in the same period, whereby age effects also played a role (Völker 2004; Bundesregierung 2002, 2003).

The unemployment rate in eastern Germany, which has remained almost constant for years, hides the significant increase in regional disparities (Bundesregierung 2006, 13, 25ff). In the course of regionally limited reindustrialization processes, a few local growth cores with comparatively high economic growth, population immigration, increased employment and falling unemployment figures have emerged - mostly metropolitan areas (e.g. Halle-Leipzig, Dresden, Jena); In the periphery, on the other hand, negative factors such as a weak economy, high unemployment figures, emigration and aging have accumulated over the years (Bundesregierung 2006, 81ff.). For example, in Thuringia, the eastern German state with the lowest unemployment rate (17.1 percent) in 2005, the unemployment rates were between 24.7 percent in the Kyffhäuserkreis and 13.1 percent in Sonneberg (Federal Employment Agency 2005). Overall, however, there was a clear east-west divide (see Tables 2 and 3).

On January 1, 2005, the fourth law for modern services on the labor market came into force ("Hartz IV"), which essentially merged unemployment and social assistance to form unemployment benefit II at the level of social assistance, tightening the criteria for accepting employment and the shortening of the period of receipt of unemployment benefit I to a maximum of 18 months. [4] After a further increase in the number of unemployed in Germany in 2005 by almost 480,000 people (1.2 percentage points), in eastern Germany more moderately (0.3 percent) than in western Germany (1.5 percent), unemployment has been falling to this day (cf. Figure 1) - also thanks to a high cyclical demand for labor.What role the policy of demanding and promoting plays in reducing unemployment is still a matter of dispute, but even proponents see a "substantial need for reform" after almost 15 years of Hartz IV (Walwei 2019, 1; Brenke 2018).

3. From 2006 unemployment decline and double adjustment

Unemployment has been falling in Germany since 2006, more so in East Germany than in West Germany, so that the unemployment rates between the two parts of the country came closer to 1.5 percentage points in November 2019 (see Figure 1). The dividing line between East and West German federal states that was still clearly recognizable in 2005/2006 is disappearing, the unemployment rates in Thuringia, Saxony and Brandenburg are now below those of North Rhine-Westphalia (see Tables 2 and 3). The regional differences have increased further (Blien et al. 2019): In the meantime, for example, the highest unemployment rate within Thuringia (Gera Stadt with 7.8 percent) is below the unemployment rate of Gelsenkirchen (12.7 percent) in North Rhine-Westphalia, in Sonneberg / With an unemployment rate of 3.8 percent, Thür is almost full employment (Federal Employment Agency 2019b). All groups of people in East and West Germany have benefited from the decline in unemployment in recent years. With the exception of the group of 15 to under 25-year-olds, who were still disproportionately unemployed in eastern Germany in November 2019 (6.7 percent) (see Table 1), the structure of unemployment by group of people in eastern and western Germany is meanwhile comparable: The unemployment rates for women in both parts of the country were just below those for men (see Figure 2). The labor market situation of the elderly has also improved, their unemployment rates were only slightly higher than the respective average (4.9 percent compared to 4.5 percent in western Germany and 6.5 percent compared to 6.0 percent in eastern Germany). The number of long-term unemployed in Germany has also fallen - from 1,326,540 million in 2008 (around 40 percent of all unemployed) to 698,344 in November 2019 (32.0 percent of all unemployed). The difference between East and West Germany is minimal (see Table 4), but the difference between the federal states is considerable (see Figure 3). Foreigners could not benefit from the decline in unemployment to the same extent as Germans in both parts of the country; in November 2019 they were about three times as likely to be unemployed as Germans (see Table 1).

All in all, with regard to unemployment, one can speak of a double adjustment process between East and West Germany - despite the structural weakness of the East German economy (Bundesregierung 2019, 14): On the one hand, unemployment in East Germany is currently only slightly higher than In western Germany, in a comparison between the federal states and regions, the clear east-west divide disappears (Table 3); on the other hand, the structure of unemployment between eastern and western Germany has also become more similar. Judging by the available forecasts, little is likely to change in the foreseeable future (Bauer et al. 2019).

To conclude that the "end of unemployment" is now based on this overall positive development would, however, be rash (Ludwig-Mayerhofer 2018, 155) - for several reasons.

The complex social reality cannot be seamlessly translated into key figures and statistics: The low unemployment rate of 4.8 percent in November 2019 still meant that around 2.2 million people in Germany were registered as unemployed. In addition, the actual deficit in regular employment is only fully visible on the basis of so-called underemployment; in addition to the registered unemployed, those persons are recorded who take part in a job promotion measure or are temporarily ill. In November 2019, underemployment in Germany was 3,137,656 or 6.8 percent (in western Germany: 2,388,603 or 6.3 percent and eastern Germany: 749,029 or 8.6 percent) (Federal Employment Agency 2019c).

In addition, the aggregated data hide the fact that in some cases considerable disparities have arisen between the federal states or regions beyond the east-west difference and are threatening to solidify (see Table 3). With all the indisputable successes, the risk for certain groups of people of becoming unemployed and staying there longer is by no means evenly distributed. Those over 50 years of age and poorly qualified, without a school leaving certificate, looking after small children or elderly relatives, with health restrictions and poor knowledge of German are affected by unemployment for an above-average rate and for a long time. The more such placement obstacles a person has, the more difficult or less likely a long-term integration into needs-based gainful employment (Hirseland et al. 2019; Bruckmeier et al. 2019).

In addition, participation in the labor force does not always guarantee work that meets the needs, so the proportion of part-time, marginal and multiple employment has been increasing for years (Bauer et al. 2019, 11), mainly women (Grünheid 2018). Employed careers are not only becoming more heterogeneous, but also more unstable (Bruckmeier et al. 2019); Today, significantly more people than the statistics suggest are unemployed in the course of their working life, but do not remain so (Ludwig-Mayerhofer 2018, 164).

Nevertheless, with more than 45 million people in employment, Germany is more of a labor society than ever. Gainful employment primarily secures livelihoods, but also social participation as well as recognition and identity, in this respect the high employment rate of more than 75 percent (share of employed persons in the population in the age group 15 to under 65 years) in eastern and West Germany is to be viewed positively as a sign of successful rapprochement and integration (see Table 5).

literature

Bauer, Anja / Fuchs, Johann / Hummerl, Markus / Hutter, Christian / Klinger, Sabine / Wanger, Susanne / Weber, Enzo / Zika, Gerd (2019): Economic headwinds for the labor market. IAB short report, 18/2019, Nuremberg.

Blien, Uwe / Van Phan Thi Hong / von Auer, Ludwig / Weinand, Sebastian (2019): The gap between the regions is growing. IAB Forum, Series "Labor Markets from a Regional Perspective", September 4, 2019, Nuremberg.