Review of the year 2021

Labour market recovers in second year of the coronavirus pandemic

04 Jan 2022 | Press release no.2

“All in all, the labour market developed well during the course of 2021. At the start of the year, however, it remained noticeably characterised by the pandemic and the measures to combat it, before a recovery then set in during the summer. At the same time, supply bottlenecks increasingly came to the fore, affecting the manufacturing sector in particular,” said Detlef Scheele, Chairman of the Federal Employment Agency (BA), on the occasion of the monthly press conference in Nuremberg today.

Average annual unemployment rate in 2021:


Change compared with 2020


Average annual unemployment rate compared with the previous year:

-0.2 percentage points to 5.7 percent

Although unemployment and underemployment have fallen noticeably, the effects of the pandemic are still being felt

In 2021, unemployment and underemployment fell noticeably in terms of the annual average. In this respect, in comparison with the previous year, the number of unemployed persons in Germany fell by 82,000 to 2,613.000 people. 

Underemployment, which also includes persons on state-supported training and employment programmes, and persons who have a short-term incapacity to work, also decreased. On an annual average, underemployment amounted to 3,368,000, or 120,000 less than in 2020.

The fall in the average annual rates of unemployment and underemployment are largely based on the considerable decreases in the second half of the year after the opening steps in the early summer of 2021. The effect of the restrictions on the labour market have due to the coronavirus pandemic now been reduced to a large extent, but are still visible – especially in the form of increased rates of long-term unemployment.

Take-up of short-time work is significantly lower than in 2020

The labour market was also supported to a considerable extent through the use of short-time work in 2021, although its take-up fell significantly compared with the first year of the coronavirus pandemic. The previous peak was reached in April 2020, when just under 6 million people were in short-time work, which was reflected in an annual average of 2.94 million short-time workers in the year 2020. The statistics of the Federal Employment Agency estimate that the annual average number of short-time workers in 2021 will be significantly lower, at approximately 1.85 million. 

With an average loss of working hours of roughly 49 percent, the use of short-time work is calculated to have secured the jobs of approximately 900,000 employed persons and prevented their (temporary) unemployment. 

Employment with social security contributions increases significantly

According to preliminary data from the Federal Statistical Office, in 2021, on average annual employment (according to the domestic concept) remained at the previous year’s level of 44.91 million. 

According to the statistics of the Federal Employment Agency, compared with the previous year, employment with social security contributions increased by 479,000 from June 2020 to June 2021 to 33.80 million. It is therefore 395,000 higher than the corresponding pre-crisis month of June 2019. Despite this rise, the coronavirus pandemic is likely to have significantly reduced the level of employment with social security contributions, assuming that the positive growth trend of the pre-coronavirus period would have continued.

Marginal employment also showed an improvement in comparison with the previous year. Part-time employment, in particular, benefited from the relaxation of the coronavirus restrictions in the early summer of 2021.

The demand for labour increases to a high level once again

The reported demand for new staff collapsed very seriously in the first lockdown of the coronavirus pandemic in the spring of 2020, but subsequently recovered. During the further opening steps in the early summer of 2021, there was then a strong revival which lasted until the end of the year. With 706,000 registered jobs on average in 2021, the demand for labour was 92,000 jobs higher than in the year 2020.