Meinhard Miegel: Unemployment in Germany

No full employment via economic growth

Just like citizens in other member states of the European Union, Germans have been waiting for an economic upward turn that will offer a job to everyone – in West Germany for nearly 30 years, in East Germany for more than a decade. Their hope and expectations are futile. On the one hand this is demonstrated by developments in economy, on the other hand by the work volume in relation to the hours actually spent with effective work.
Between 1973 – the beginning of the problematic employment situation that is still prevalent today – until 2000 the worth of goods and services generated in Germany according to the current standard of cash value augmented by nearly 60 % from around 33.000 to nearly 52.000 German Mark per capita. Seen in a long-term perspective that is a lot. In the 19th century for example the average per capita growth in the economy amounted to only a third of the growth rate achieved in the last 27 years.

Yet, this growth rate was not sufficient in order to keep the work volume stable. On the contrary, it diminished by one sixth per capita. On average, today every employee or working person works 43 days less per annum than in 1973. Or, to put it more specifically: millions of fulltime occupations have been turned into part time jobs or minor employment situations. Without this conversion and without the shortening of individual working hours today there would be around 9 million unemployed instead of 3.6 million.

The long-term trend

This development follows a steady trend. For 150 years, the amount of goods generated per capita has been mounting while the work volume has been shrinking. Today each hour in Germany generates twice as many goods and services as in 1973, ten times more than in 1950 and twelve times more than in 1900. The reason for it being the rapidly rising input of knowledge and capital. For generations, this input has been pushing the progress in productivity faster than the economic growth.

That has been and still is a deliberate effect. The overwhelming majority of the population prefers material prosperity and at the same time more leisure time. This majority opts for higher real incomes, finishing work at an earlier hour, undisturbed weekends, long vacations and an early beginning of the third stage of life, the period without work and employment. This is why the current trend won’t change – as can be seen when taking into account the international perspective. The progress in productivity will continue to be ahead of the economic growth.

As a consequence, full employment will only rarely – if at all – be obtained by high rates of growth. It is no coincidence that the three periods of full employment that Germany saw in the 20th century were not due to economic growth but were conditioned by war, demographics and, in the former GDR, by technical backlog and a severe lack of capital. Under normal conditions, a rise in knowledge and capital will diminish the amount of paid work.

The working population has to adapt

As much as economic growth is desirable – it only helps to solve employment problems to a very small degree. Much more important is the adaptation of the working population to changing economic and social conditions. This is where Germans and Europeans have an enormous deficit. Many still adhere to views shaped by the industrial society which are simply outdated. Politics and society reflect this problem. Still, they often represent a system whose foundations have disintegrated.

Nothing shows this more clearly than the traditional conception of the welfare state. Because of its close connection to gainful employment it has increased the cost of the latter to such an extent that it can only be covered if it has immediate access to the productivity of knowledge and capital. Those types of employment that are too distantly located from knowledge and capital have been driven out of the labour market to a large extent. Either that sort of work is left undone or it escapes the costs of the welfare state.

Developing the potential of employment beyond the labour market

At the moment, the black market offers nearly six million full time jobs that are in demand. In addition, the same share is achieved by individual job offers although it could be handled just as well, or even better, via the labour market. That however does not happen since outdated juridical and social patterns present obstacles that are very hard to overcome. They are also a cause why not even a fraction of the near-to two billion extra hours that are currently accomplished in Germany are turned into additional regular jobs. The expenditure concerning the recruitment and dismissal of labour forces is far too high.

What is more, the employees that are resident in Germany each year reject millions of job opportunities since they do not comply with their views which have been shaped in the era of the industrial society. Hundreds of thousands of jobs are only staffed with a huge delay; around one million of non-EU citizens are each year temporarily employed since no one here is willing to accept the jobs offered; apart from unemployment that is related to issues of the work region or work sector there is an equally high lack in the labour force because the employees are not flexible enough and do not match specific demands.

Developing entrepreneurial conduct

Many people are still deeply committed to the conditions of the industrial age and expect to be met exactly where they are currently situated in terms of their location and job qualification. They do not think of taking initiative and becoming entrepreneurs of their own manpower. They haven’t been taught and asked to do so. What is more: the politicians have promised them to cater for everything, including their employment. Considering the conditions of a social market economy, this promise had been dishonest right from the start. A liberal democratic state cannot give any guarantees for full employment.

If it were possible to break up the impeding factors of the labour market and convert part of the black labour as well as individual work not necessarily having to be offered as such into the regular labour market, and if it were also possible to convert part of the extra hours into additional jobs and to further the acceptance of millions of current as well as potential jobs, and if it were finally possible to move more people to act more entrepreneurally – then it would be possible for all people in Germany and in the European Union who are willing and capable to work to actually do so.

Full employment is possible

The sort of unemployment that Germans and Europeans have been lamenting for over a generation, is not a direct consequence of too little economic growth – economic growth as such would have allowed for full employment without further ado – rather, it is a consequence of deeply-rooted individual and collective views and behaviours. These views and patterns of behaviour obstruct peoples’ adaptation to a constantly changing reality and thereby obstruct the creation of new jobs. As long as large parts of the population, of politicians and of the trade unions cling to the mental framework of the industrial age we will not witness an increase in job offers. Yet, improvement is on the horizon. People slowly learn to adapt to the change. And that gives us reason for hope.

Prof. Dr. Meinhard Miegel
Institute for Economy and Society Bonn e.V. (registered association) - IWG
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