Recovery on the labor market slowed down

The number of unemployed in Germany is falling – but only because of spring. Short-time work climbs back above the three million mark.

Asked: A worker checks camshafts for a vehicle.

Dhe unemployment in Germany has fallen further thanks to the beginning of spring. After the significant decline in March, it fell again in April by 56,000 to 2.771 million, as the Federal Employment Agency (BA) announced on Thursday in Nuremberg. “Thanks to the spring recovery, the job market is developing solidly,” said CEO Detlef Scheele. “The ongoing restrictions in many areas are slowing down the recovery, but are not leading to any new burdens overall.”

In spring, for example, there is traditionally more to do in construction and agriculture. Usually this also applies to outdoor catering, which, like some other industries, is suffering from lockdown restrictions this year. This is probably one of the reasons why the decline was weaker than in previous years. For comparison: In 2018 and 2019, the number of unemployed fell by more than 70,000 in April.

For the second time since the beginning of the year, unemployment rose seasonally adjusted, i.e. taking the usual seasonal fluctuations out of the equation: by 9,000 April to a stop. Seasonally adjusted unemployment had already risen in February. The BA explained this at the time by stating that fewer people had started a labor market policy measure and are therefore officially considered unemployed.

Significantly more unemployed than before the pandemic

Unemployment is therefore still significantly higher than before the outbreak of the pandemic. For comparison: In March of last year there were 2.268 million registered unemployed in Germany. In addition, many employees in Germany are still on short-time work. According to preliminary extrapolated data from the BA, cyclical short-time working benefits were paid to 3.27 million employees in February – more recent data are not yet available. The number of short-time workers was corrected upwards in January, which, according to current information, should now have amounted to 3.19 million. The last time short-time work was above the three million mark in July of last year.

In this environment, there is hope in industry with key sectors such as mechanical engineering, which are already on the upswing again due to the strong demand from China and America and are looking for staff. As early as March, the number of new jobs registered with the employment agencies had almost reached the pre-crisis level again – according to the BA, the drivers are industry and temporary employment. According to the agency’s job index, demand for workers picked up noticeably in April for the second month in a row. Above all, the manufacturing industry, the construction industry and the information and communication industry are looking for more employees again.

Polls published this week by the Munich Ifo Institute and the Institute for Employment Research, which is part of the BA, point in the same direction. For example, the Ifo employment barometer, which is based on the employment intentions of around 9,000 companies, climbed to its highest level in more than a year in April. In industry, for the first time in more than two years, more companies want to create employment than reduce them. Mechanical engineering in particular is looking for new employees. BA boss Scheele pointed out on Thursday, however, that many companies first cut back on short-time work before hiring new employees.

In the service sector, on the other hand, willingness to hire remains unchanged at a low level. While jobs are being lost in the hospitality and tourism industries, IT service providers as well as architecture and engineering offices are building up staff. According to the Ifo Institute, plans for hiring and firing are currently balancing out in trade and construction.

In March, according to the Federal Statistical Office, the number of people in employment with a place of residence in Germany rose slightly, seasonally adjusted, by 16,000 to 44.3 million. Employment is thus still well below the pre-crisis level: 1.7 percent or 747,000 people were less gainfully employed than in February 2020, the month before the restrictions caused by the corona pandemic in Germany.