German unemployment rates declined substantially in the last 10 years. What are the causes? It is not because a very high economic growth or demographic influences, but institutions (Kurzarbeit and Zeitsparkonten) and the reforms/wage moderation which might have been effective.

1. Michel van Smoorenburg
Michel.vansmoorenburg@uwv.nl
Public Employment Service – The Netherlands
Causes for the fall of
German unemployment
- The role of Mini-jobs?

2. What’s a Mini-job?
 Maximum € 450 a month
 In most cases 15 to 20 hours a
week
 No taxes
 No contributions for social security
by employees
 From 1-1-2013 there is a choice to
join pension (21% does)

3. Unemployment rate 2004-2014 (eurostat)
0
2
4
6
8
10
12
14
2
0
04
M
0
2
2
0
04
M
0
5
2
0
04
M
0
8
2
0
04
M
1
1
2
0
05
M
0
2
2
0
05
M
0
5
2
0
05
M
0
8
2
0
05
M
1
1
2
0
06
M
0
2
2
0
06
M
0
5
2
0
06
M
0
8
2
0
06
M
1
1
2
0
07
M
0
2
2
0
07
M
0
5
2
0
07
M
0
8
2
0
07
M
1
1
2
0
08
M
0
2
2
0
08
M
0
5
2
0
08
M
0
8
2
0
08
M
1
1
2
0
09
M
0
2
2
0
09
M
0
5
2
0
09
M
0
8
2
0
09
M
1
1
2
0
10
M
0
2
2
0
10
M
0
5
2
0
10
M
0
8
2
0
10
M
1
1
2
0
11
M
0
2
2
0
11
M
0
5
2
0
11
M
0
8
2
0
11
M
1
1
2
0
12
M
0
2
2
0
12
M
0
5
2
0
12
M
0
8
2
0
12
M
1
1
2
0
13
M
0
6
2
0
13
M
0
9
2
0
13
M
1
2
Netherlands Germany EU28 France Belgium United Kingdom

4. Relationship between economic growth (X) and
growth unemployment rate (Y), 2003-2013

5. Actual and forecasted unemployment rate in
Germany by the Law of Okun
Not economic
growth but
something else
explains the
positive
development

6. Relationship between economic growth (X) and
growth unemployment rate (Y), 2003-2013
Japan
Turkey
UK
Finland
Slovakia
Slovenia
Romania
Portugal
Poland
Austria
Netherlands
Malta
Hungary
Luxembourg
Lithuania
Cyprus
Italy
Spain
Greece
Ireland
Estonia
Germany
Denmark
Czech Republic Bulgaria
Belgium
EU28
-15
-10
-5
0
5
10
15
20
-1 0 1 2 3 4 5 6
Average economic growth 2003-2013
GrowthUnemploymentrate2003-2013
Seletion of countries
with almost the same
economic growth

7. A demographic cause?
(Countries with almost the same economic growth 2003-2013)
-5%
-1%
-1%
0%
2%
2%
3%
3%
3%
4%
15%
7%
3%
14%
12%
6%
7%
9%
6%
-6%
5%
16%
-10% -5% 0% 5% 10% 15% 20%
Germany
Finland
Norway
Belgium
France
EU28
United Kingdom
Netherlands
Croatia
Hungary
Spain
Growth unemployment rate 2003-2013 Active population 2003-2013
Germany has the same
growth of the active
population as Hungary,
France, UK and the
Netherlands but a
much better
development of the
unemployment rate

8. The real reason:
German’s labour market reforms
 Hartz I, II, III (2003-2004):
 Introduction Job Centres
 Mini-jobs allowed for more than 15 hours a
week
 Training vouchers
 Deregulation temporary work
 Restricted access to unemployment benefit
 Hartz IV (2005)
 Shorter duration unemployment benefits
 Low social assistance
 Ein-euro-Jobs, Ich-AG
 Other measures
 Age for pensioning from 60 to 67
 Kurzarbeit during 2008/2009
 Zeitsparkonten

9. How many mini-jobs?
 From 4 million in 2002 to about 7,5 million in 2013
 20% of the active population
 Especially in catering (48%), retail (30%), other
business service (30%), culture, recreation and other
service (45%), agriculture (25%), transport & storage
(23%).
 An increasing share of elderly employees with a mini-job
(27% between 50-65; 12% 65 or older)
 62% female

10. Critiques
 Very low wages, working poor
 Exploitation: less vacation,
unpaid extra work, unpaid trial
days etc.
 No social security/no pension
 Only one out of seven will get a
real job after the minijob
 Displacement of real fulltime
jobs

11. Effect mini-jobs on unemployment
 Not that big:
 The growth of mini-jobs was mainly under the Nebenjobs
(now 2,8 million)
 Displacement of former fulltime jobs
 But:
 All reforms together had a huge influence
 Especially:
- Kurzarbeit en Zeitsparkonten in 2008/2009
- The lack of a minimum wage, wage moderation
German job miracle

12. Current situation German labour market
 Strong export position, growth world economy
 New: growing inland consumer demand
 But:
 Legal Minimum wage 8,50 euro > 1-1-2015
 When 63 years old and 45 working years you can retire
without deduction
 Declining population 15-65 years
Labour market shortages can stop economic growth

13. Dankeschön!!