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Global Economy

What the official statistics hide

Are the unemployment statistics embellished?

Yes and no. After all, who counts as unemployed is a question of definition. The official criteria are set by law in Germany. Each change affects the statistics. Politicians repeatedly reformulated the criteria in such a way that the unemployment figures officially fell.

Only in a few cases did changes in the law lead to an increase in the number of unemployed in the official statistics. A well-known example of this is the Hartz IV reform, because from 2005 employable social assistance recipients were included in the statistics. According to the Federal Employment Agency (BA), this Hartz IV effect increased the number of unemployed by around 380,000 at the time.

Who is considered unemployed?

Anyone who is officially unemployed in Germany is determined by SGB III. In principle, this legal definition is broad: It includes all adults who are unemployed or work less than 15 hours a week, are looking for employment subject to social security contributions of at least 15 hours a week and are immediately available for a job through the employment agencies. In addition, those affected must have personally registered with an employment agency as looking for a job. However, detailed regulations mean that millions of people do not meet the criteria in practice and do not appear in the unemployment statistics. Pupils, students and pensioners are generally not considered to be unemployed, even if they are of working age. In general, only people who are at least 15 years old and have not yet exceeded the statutory retirement age can be considered unemployed.

Who is missing from the unemployment statistics?

Those who do not register to look for work do not appear in the statistics. The same applies to anyone who cannot or does not want to work at least 15 hours a week. Anyone who is on sick leave is also excluded from the statistics during this time. In the unemployment statistics, however, those who are supported by instruments of labor market policy are missing. This applies to further education and training as well as training and job creation measures. Anyone who has a one-euro job or receives a start-up grant is not officially unemployed. The statistics also do not include all persons over the age of 58 who have been receiving unemployment benefit II for at least twelve months and have not been offered any employment subject to social insurance contributions during this time. In addition, the employment agency removes from the statistics everyone who makes placement difficult because they do not fulfill their obligations when looking for a job – for example, because they are not willing or not promptly willing to take part in measures by the employment agencies, or because they refuse to take part to accept "reasonable employment under the usual conditions of the labor market in which he or she is concerned".

How many unemployed are there really?

How many jobs are missing in Germany can only be estimated. In addition to the number of unemployed, the Federal Employment Agency (BA) publishes other values to illustrate the gap in missing jobs. The so-called "unemployment in the broader sense" also includes all those who are supported by certain instruments of labor market policy (e.g. job creation measures, one-euro jobs, professional training) or are only excluded from the official statistics because they are over 58 years old and have not received an offer for employment subject to social security contributions for at least twelve months. In 2021, this figure was around 340,000 higher than the official unemployment figure. In addition, the BA also reports so-called underemployment every month. In addition to "unemployment in the broader sense", it includes numerous other citizens who benefit from support from the employment agencies (e.g. start-up grant, entry fee) or are on sick leave. In addition to this "underemployment in the narrower sense", there is also the broadest term of underemployment, which also includes short-time workers and people in semi-retirement. This underemployment, as defined by the BA, was a good 754,000 people higher in 2021 than the official number of unemployed.

The Federal Statistical Office came up with a so-called hidden reserve of 899,000 million people for 2019. In this definition, on the one hand, this includes everyone who is currently looking for work but is not available at short notice to start a job. On the other hand, the number also includes those who are not looking for a job at the moment, but are basically available for a job and would also like to work. In addition, the statisticians calculate a number for underemployment, which means something completely different than the same term used by the Federal Employment Agency. At the Federal Statistical Office, this is about everyone who is already working but would like to work more hours a week and would also have the opportunity to do so. That number was 2.08 million in 2019.

Is everyone unemployed who receives unemployment benefit I or II?

no According to the Federal Employment Agency, only around 42 percent of employable recipients of unemployment benefit II, which replaced unemployment assistance and social assistance in 2005, were also considered unemployed in 2021. The rest were not formally available for the labor market for various reasons or took part in support measures. Another group are boosters. They work at least 15 hours a week and are therefore not considered unemployed. However, because their income is not sufficient to cover their livelihood, they also receive unemployment benefit II. Recipients of unemployment benefit I are not automatically considered unemployed either. On average in 2021, this applied to around 185,000 people who, for example, were temporarily on sick leave or were taking part in certain support measures. Conversely, the official statistics for 2021 also included around 134,000 people who did not receive unemployment benefit I or II as unemployed.

What are seasonally adjusted numbers?

There is a typical ups and downs in unemployment over the course of a year. As a rule, the rate increases in winter and falls in the summer months. Sectors such as the construction industry are responsible for this. However, regular appointments such as school holidays also have an impact on unemployment. The statisticians calculate average values for these seasonal fluctuations. This effect, which varies from month to month, is subtracted from the unemployment figures. The results are seasonally adjusted figures. These are better suited to identify the real trend in the labor market, which is mainly based on the economic development.

Does Germany trick more than other countries?

no Every country defines unemployment differently, but the German criteria are relatively broad.

Is the German unemployment rate internationally comparable?

no The criteria of the International Labor Organization (ILO) apply to international comparisons. Their rules for calculating the national unemployment rate differ greatly from the German requirements. According to the ILO, for example, unemployment ends when someone works at least one hour a week. The Federal Statistical Office calculates the figures based on these rules with the help of a random survey. The Federal Employment Agency, on the other hand, uses the complete data from its own company. The official German unemployment rate is usually higher than the ILO unemployment rate for Germany. In 2021, the official unemployment rate from the Federal Employment Agency was 5.7 percent. According to the ILO concept, an unemployment rate of only 3.3 percent was calculated for Germany in 2021.

Which labor market statistics are important?

In addition to the monthly labor market report from the Federal Employment Agency and the unemployment rate based on the ILO standard, the employment statistics are also interesting. It indicates how many people are employed. For 2021, the Federal Statistical Office calculated an average value of 44.9 million.

Do the statistics show how well labor market policy is working?

The success or failure of labor market reforms cannot be read directly from the monthly figures. However, individual evaluations of regions or specific groups often provide indications of where labor market policy is effective and where it is not. This is particularly true when statistically examining developments over a period of several months or years.

Are current unemployment figures comparable to previous ones?

Not without further ado. Trends can certainly be identified. However, because the calculation rules for the statistics have been changed again and again, current figures are not directly comparable with earlier ones.

Do you know for sure how many vacancies there are?

no The Federal Employment Agency reports the number of non-subsidized jobs reported to it on the primary labor market on a monthly basis. But no employer is forced to report their vacancies to the Federal Employment Agency. So many jobs never appear in the official statistics. The Internet portal of the Federal Employment Agency also searches private job exchanges on the Internet. However, it can also happen that advertisements for the same position are duplicated or advertisements for jobs that have already been filled have not yet been removed.

The Institute for Labor Market and Vocational Research of the BA conducts a representative survey of employers every quarter to record the "overall job vacancies". However, the results of this study are only available with a considerable delay.

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