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The labour market in July 2020

No further rise in unemployment as a result of corona
30 Jul 2020 | Press Release No. 36

“The corona pandemic is still exerting pressure on the labour market, but the German economy is on the road to recovery. The extensive utilisation of short-time work has staved off redundancies and more considerable rises in unemployment”, said the Regional Chairman of the Federal Employment Agency (BA), Daniel Terzenbach, at today’s monthly press conference in Nuremberg.

Unemployment rate in July: 
+57,000 – now 2,910,000

Unemployed persons compared to last year: 
+635,000

Unemployment compared to last month: 
+0.1 percentage points – now 6.3%

Unemployment and underemployment

At the start of the summer break from June to July, the number of unemployed persons rose at the usual rate. The corona-related rise has not continued this month for the time being. The number of unemployed persons currently stands at 2,910,000. This constitutes a rise of 57,000 compared to last month and a decline of 18,000 if the figures are adjusted to account for seasonal factors.

The number of unemployed persons has increased by 635,000 compared to last year. The unemployment rate amongst the overall population has risen by 0.1 percentage points to 6.3%, constituting a rise of 1.3 percentage points compared to the figures recorded in July last year. The short-term unemployment rate stood at 4.5% in June, as calculated by the Federal Statistical Office according to the ILO short-term employment concept.

The underemployment rate, which also considers changes in labour market policy and short-term incapacity to work, has risen by 5,000 since last month if seasonal factors are taken into account. A total of 3,661,000 persons were underemployed in July 2020 – 465,000 more than a year ago.

Short-time work

Before receiving short-time working allowance for their employees, companies have to report the expected reduction in their working hours. According to the data obtained so far, short-time working arrangements were reported for 190,000 million people from 1 to 26 July due to the economic situation. In other words, short-time working arrangements are now being reported for much fewer people following the massive rise in March and April.

Data on the actual amount of short-time work is available until May. According to the provisional extrapolated figures of the BA, short-time working allowance was paid out to 6.70 million employees in May, 6.10 million people in April and 2.46 million people in March. This puts the amount of short-time working allowance well above the levels recorded in the great recession of 2008/2009.

Minor employment and employment subject to national insurance payments

The corona crisis has also led to a considerable decline in minor employment and employment subject to national insurance payments. According to the Federal Statistical Office, the number of persons in employment (in line with the domestic concept) in June rose by 40,000 compared to the previous month if the figures are adjusted to account for seasonal factors. There are now 44.62 million persons in employment – 681,000 fewer than last year. According to the extrapolated figures of the BA, a total of 33.33 million persons were in employment subject to national insurance payments in May, constituting a decline of 98,000 compared to last year. If these figures are adjusted to account for seasonal factors, the levels fell by 74,000 from April to May, when economic restrictions were introduced in response to the corona pandemic.

Labour demand

The demand for new workers plummeted at the start of the corona crisis and has since stabilised at a low level. 573,000 jobs were registered with the BA in July – 226,000 fewer than last year. If these figures are adjusted to account for seasonal factors, the amount of jobs registered with the BA has dropped by 5,000. Similar to the previous two months, the number of new jobs registered with the BA increased slightly in July. The BA job index (BA X) – an indicator of the labour demand in Germany – rose by 1 point to 92 points in July 2020, putting it 35 points below the level recorded last year.

Cash benefits

1,149,000 persons received unemployment benefits in July 2020 – 409,000 more than a year ago. In July, there were 4,079,000 persons who were fit to work and eligible to receive basic security benefits for job seekers (German Social Security Code II). This represents an increase of 179,000 persons compared to July 2019; 7.5% of people of working age living in Germany were in need of help.

Training market

Fewer vacancies are being filled on the training market as a result of the corona crisis. There is still a delay of around six to eight weeks, although some catching up has been done since June. From October 2019 to July 2020, 439,000 persons applied for an apprenticeship through their local Agentur für Arbeit or Jobcenter – 40,000 fewer than in the same period in the previous year. 182,000 of these were still looking in July. At the same time, 495,000 in-company training positions were registered – 43,000 fewer than last year. In comparison to the previous year, there was a noticeable decrease in the number of apprenticeships registered by metalworking and electrical engineering firms, hairdressing salons, hotels and restaurants IT companies and commercial trades.

201,000 apprenticeships were still vacant in July. Regardless of the delayed clearing process, the training market will be in motion throughout the summer, and so it is still too early for a more informed evaluation.