Is the Current German Unemployment Rate Accurrate?

So, in the midst of the Coronavirus period.....it's probably time to review some facts.

1.  How many Germans are on short-time work currently?

DW did an article several months ago....about two months into the period.  The number then was placed at 10.1-million Germans.  You have to remember....the most ever put on short-time work prior to 2020....was in 2009, with 1.4-million Germans.  So we are at eight times that 2009 number.

For reference, in that 2009 period....the yearly unemployment rate was 7.7-percent, even with the short-time work deal.

2.  How many Germans are employed....out of the 83-million?

As of this year, the German government says 44.5-million.  That includes everyone....part-time, full-time, Germans, visa-holders, etc.  So with the short-time in the mix.....one out of four people on the street....are hooked to short-time.

3.  How many Germans are employed by the government itself.....at the local, district, state and federal level?

Well....the EU says 3.7-million Germans work in some capacity for the government.  This includes the police, firemen, statistics people, etc.

None of them are on short-time work.  So that skews the above mentioned numbers to some degree.

4.  How long does 'normal' short-time work run?  By law, 12 months.  An exception has been drafted by the CDU-CSU-SPD coalition government, to run 24 total months....meaning past the election period of 2021, and into March of 2022.

The odds of another short-time extension occurring?  You can't forecast something like this or give it odds.  It's very possible to reach the fall 2021 election....find that nothing much has resolved the crisis,

5.  The short-time law preventing dismissals?

This gets interesting, because the regulation says that as long as things appear to a routine returning to 'normal'.....you won't dismiss anyone.  If you reach a consensus that 'normal' means reduced product sales, then you'd signal the government, and layoffs would then occur.

The odds of this?  Basically, if you dig through all of the car manufacturing companies in Germany.....they are all hinting that a layoff period is coming.  The timing of this is the unknown. 

BMW says....worldwide, it will cut 6k jobs in the next twelve months.  Mercedes is talking 15k jobs worldwide.  Audi is saying 9.5k will be cut over the next four years.....as they close in on the electric car business.  Before Corona came along, Opel was talking 2k-plus jobs in Germany going away, with some offers to Germans to take on work in France as part of the future.

6.  How many Germans are on Hartz IV welfare?

Well....as of 2018, it was 5.9-million.  These people don't generally count as looking-for-work.  They are counted as being on the welfare rolls.

Affect on short-time work?  Zero.

7.  The current German unemployment rate?

As of July, the German government reports the national rate to be 6.4-percent (up from 5.3-percent in Feb of 2020).

The 2019 rate?  It bounced around between 4.8-percent to 5.3-percent.

The worst rate over the past five years?  7-percent, January 2015.

If short-time didn't exist?  You would have to figure that the bulk (75-percent) of the 10.1-million Germans on short-time would be laid off, and the unemployment would be in the range of 15-percent easily.  If you counted in the Hartz IV welfare Germans.....it gets pretty dismal, but fortunately, those numbers are not inserted into the data collected.

8.  Final question.....how long can short-time be funded?  No one ever cites the size of this bucket or monthly cost to the government (has to be into the billions).

Under the old max size situation (2009), it came to a close before the 12th month, and the economy moved on.

The added threat of lesser tax revenue occurring?  Well, this gets mentioned almost weekly.....across almost all sectors....there is simply less cash flow.  You can talk to airlines, hotels, pubs, restaurants, car dealers, electronic shops....they all talk less in sales and tax collection.  The hardware/home improvement industry?  That's about the only industry that seem unaffected at this point in time.

Without the tax revenue collection at max potential.....it means that the government draws upon reserves to keep short-time funded and carry ailing companies along to some positive conclusion.

So by the rules of the 'game'.....the current unemployment rate is accurate.  But this only works if you use short-time to carry the public to some successful conclusion (now likely being March 2022).

The odds that all of this draws serious employment chatter for the fall 2021 election?  Better than 90-percent chance on this.