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The labour market in April 2020

Growing pressure in the corona crisis
30 Apr 2020 | Press Release No. 27

“The corona pandemic may trigger the worst ever recession in post-war Germany, and it is also exerting tremendous pressure on the labour market. Unemployment and underemployment rose in April for the first time on record, and an unprecedented level of short-time working arrangements are being reported. And the demand for new employees has absolutely plummeted”, said the Chairman of the Federal Employment Agency (BA), Detlef Scheele, at today’s monthly press conference in Nuremberg.

Unemployed persons in April:
+308,000 – now 2,644,000

Unemployed persons compared to last year:
+415,000

Unemployment compared to last month:
+0.7 percentage points – now 5.8%

Unemployment and underemployment

The number of unemployed persons rose strongly by 308,000 to 2,644,000 from March to April as a result of the corona crisis. If these figures are adjusted to account for seasonal factors, a similarly strong rise of 373,000 can be calculated for April compared to last month. The number of unemployed persons has increased by 415,000 compared to last year. The unemployment rate amongst the overall population has risen by 0.7 percentage points to 5.8%, constituting a rise of 0.9 percentage points compared to the figures recorded in April last year. The unemployment rate amongst the labour force stood at 3.8% in March, as calculated by the Federal Statistical Office according to the ILO employment concept.

The underemployment rate, which also considers changes in labour market policy and short-term incapacity to work, has risen by 244,000 since last month if seasonal factors are taken into account. In other words, underemployment is not growing as quickly as unemployment. This is largely due to the fact that labour market policies were not implemented due to social distancing restrictions. A total of 3,466,000 persons were underemployed in April 2020 – 271,000 more than a year ago.

Number of employees with reduced working hours

Before reducing their employees’ working hours, companies must submit a written report to their local Agentur für Arbeit by the end of the first month in which short-time working allowance is to be paid out. From March to 26 April 2020, the Agentur für Arbeit received 751,000 reports for up to 10.1 million employees, although not all these employees will have ultimately had their working hours reduced. Nevertheless, this is an unprecedented figure compared to the last few decades and greatly exceeds the number of reports submitted during the great recession of 2008/2009. Throughout the entire “crisis year” of 2009, the Agentur für Arbeit received reports for 3.3 million people.

Minor employment and employment subject to national insurance payments

The effects of the corona crisis are not yet reflected by the data for minor employment and employment subject to national insurance payments. There has been a further increase in both forms of employment, but not as strong as last year. According to the Federal Statistical Office, the number of persons in employment (in line with the domestic concept) in March rose by 41,000 compared to the previous month if the figures are adjusted to account for seasonal factors. There are now 45.04 million persons in employment – 82,000 more than last year. This increase is largely due to the rise in employment subject to national insurance payments – 390,000 more than last year. According to the extrapolated figures of the BA, a total of 33.59 million persons were in employment subject to national insurance payments in February. If these figures are adjusted to account for seasonal factors, this constitutes a rise of 11,000 persons from January to February.

Labour demand

The demand for new workers has absolutely plummeted as a result of the corona crisis. 626,000 jobs were registered with the BA in April – 169,000 fewer than a year ago. If these figures are adjusted to account for seasonal factors, the amount of jobs registered with the BA has dropped by 66,000. The absence of new jobs is the main factor here. The BA job index (BA‑X) – an indicator of the labour demand in Germany – fell by 19 points to 94 points in April 2020. This puts it 37 points below the level recorded last year.

Cash benefits

900,000 persons received unemployment benefits in April 2020 – 180,000 more than a year ago. In April, there were 3,868,000 persons who were fit to work and eligible to receive basic security benefits for job seekers (German Social Security Code II). This represents a decrease of 112,000 persons compared to April 2019; 7.1% of people of working age living in Germany were in need of help.

Training market

From October 2019 to April 2020, 384,000 persons applied for an apprenticeship through their local Agentur für Arbeit or Jobcenter – 34,000 fewer than in the same period in the previous year. 241,000 of those applicants were still looking in April. At the same time, 455,000 apprenticeships were registered – 39,000 fewer than last year. 274,000 of those apprenticeships were still vacant in April. Apprenticeships were most frequently registered for trainees in retail (30,000), sales (19,000) and office management (17,000). Fewer vacancies are being filled on the training market as a result of the corona crisis. However, the training market is still very much in motion, and so it is still too early for a more informed evaluation.