UNEMPLOYMENT IN WEST GERMANY:
CURRENT ASPECTS AND LONG-TERM TRENDS
Susanne von Below, Frankfurt am Main
As in many other countries, unemployment is a very significant issue in Germany. Around eighty percent of the population name it as the most important
problem1 (Forschungsgruppe 1999). In the two parts of Germany, the history,
structure, and reasons for unemployment are quite different and have divergent
sets of reasons. This paper will concentrate on unemployment in West Germany.
After an overview on the development of unemployment since the 1950´s and
a discussion of terms and indicators used for describing unemployment, an
analysis of the structure of unemployment as it exists today in West Germany
will follow. There will be a special emphasis on groups that have greater difficulties on the job market than others. The paper will close with some proposals
for solving the problem of unemployment, as they are being discussed in Germany at present.
1. Unemployment in West Germany: The Development over the Past Five
Decades
As shown on Figure 1, the absolute number of unemployed persons has
changed considerably in the course of the past 50 years.
Figure 1
Unemployed persons in West Germany 1950-1998
3500000
3000000
2500000
2000000
1500000
1000000
500000
1998
1995
1992
1989
1986
1983
1980
1977
1974
1962
1950
0
Source: Bundesanstalt für Arbeit (Ed.): ANBA Sondernummer: Arbeitsmarkt 1997; Pressemitteilung 03/99.
After an early high in the post war times, when the economy had to develop
and many refugees needed to be integrated into the labour market, the numbers
of unemployed persons fell steadily and stayed around 200,000. There was a
sudden rise to about 400,000 in 1967/68 which is not shown here because data
until 1974 are for every four years. From the early seventies on, unemployment
numbers climbed constantly. There were only short breaks in the second half of
the seventies and in the early nineties. The latter was due to increased demand
from East Germany.
In this paper, most data are for 1997, since detailed analyses are available for
that year. For overall numbers, though, the 1998 data are already at hand. Most
of the data are yearly averages, in order to exclude seasonal differences.
In 1997, the yearly average number of unemployed persons in West Germany
was 3,020,900 (2,904,300 in 1998). This shows that unemployment is not only
very important in the perception of the population, but it does pose an immense
problem to the country and constitutes a great challenge to politics.
2. Unemployment and the Unemployment Rate: Different Definitions
The number of unemployed persons as used here is the number of people who
are currently out of employment - or work only very little, who are available for
new employment, who have registered at one of the official employment offices
and renew this registration regularly, who live in Germany, and are under the
age of 65. This number of the officially registered unemployed persons differs
from and is higher than the one used by ILO-standards, which is taken from
representative surveys and consists of those who have not worked during the
past seven days, have been looking for work during the previous four weeks,
and are available to start work within the next two weeks.
In Germany, two different definitions of unemployment rates are being used:
 The number of officially registered unemployed persons in relation to the
dependent civilian labour force (those currently in employment subject to social
security - including civil servants except military, including apprentices and
those marginally occupied who do not have to pay into the social security - plus
the unemployed). This percentage has risen from 9.3 % in 1985 to 11.0% in
1997 and gone back down to 10.5% in 1998.
 Since 1994, the German government uses a different official unemployment rate: The ratio of registered unemployed persons to all civilian labour force
including self-employed persons. Thus self-employment is becoming a way out
of unemployment for more and more unemployed persons and for those helping/working within the family. This lowers the official unemployment rate to
8.2% in 1985, 9.8% in 1997, and 9.4% in 1998.
The definition that is being used in this paper is the first one, as most researchers consider it more appropriate since self-employed persons carry a very
low risk of becoming unemployed and would have no right to claim unemployment benefits. The two rates can be compared on Figure 2.
Figure 2
Unemployment rates in West Germany by different definitions 1989-1998
12
10
8
6
4
2
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
reference to all civilian labor force
reference to the dependent civilian labor force
Source: Bundesanstalt für Arbeit (1998 and 1999).
3. Is Official Unemployment Only the Tip of the Iceberg?
Officially registered unemployed persons make up only a certain part of those
actually looking for employment or those in need for more employment than
they actually have at a certain point of time. There are certain groups that are not
unemployed but would be available if the labour market situation allowed.
 One very important group are those who take early retirement and are no
longer available for the labour market. This group consisted of about half a million persons in 1997.
 The second substantial group of persons available for the labour market
that is not officially registered as unemployed are the „hidden reserves“; They
include those persons currently taking part in labour market activities as can be
seen on Fig. 3:
Figure 3
Persons in labour market activities in West Germany 1992-1998
1400000
1200000
1000000
800000
600000
400000
200000
0
1992
1993
1994
Short-time Work
Vocational Training Measures (full time)
German Language Courses
Retirement due to Unemployment
1995
1996
1997
1998
Employment Schemes
Rehab.-Reintroduction into Labor Market
Non-Availability-Privilege (58yrs+)
Source: Bundesanstalt für Arbeit (1998a): 50, 76, 81; (1999a).
This group consists of persons in full-time vocational training measures, in
employment schemes, German language courses, and rehabilitation and reintroduction into the labour market. Persons 58 years and above are eligible for the
Non-Availability-Privilege which grants them unemployment benefit but does
not consider them as unemployed, since they can assume the privilege of not
being available for a new job. Persons 60 years and above who have been unemployed for at least one year can enter early retirement due to unemployment.
 The other group of persons within the hidden reserves are those who would
like to work and would be available if the right job was offered to them. Estimations for this particular group vary greatly, since there are no specific data
available about it.
 Another extensive group of people that is not considered unemployed but
does not hold a full job is the group working short-time. Their number has gone
up and down considerably over the past decade. The average lost working hours
for those working short-time were 41% in 1997.
In the following, only the officially registered unemployed persons will be
dealt with, since they are covered by data that are being published regularly. So,
the situation at a given point of time and the development over a certain period
of time can be looked at.
4. Benefits for Persons Affected by Unemployment
Most of the registered unemployed persons receive unemployment benefits.
Of the 4,926,303 persons entering unemployment in West Germany in 1997,
55.6% received „Arbeitslosengeld“ which is unemployment benefit as a certain
percentage of the former wage that almost everyone who paid into unemployment insurance is entitled to for a certain period of time depending on the duration of his payments. Additional 10.5% received „Arbeitslosenhilfe“ which is
unemployment assistance granted if the person is needy and his or her entitlement to unemployment benefit has not been acquired yet or has run out. Some
1.9 % of people entering unemployment receive „Wiedereingliederungshilfe“
which is rehabilitation assistance. Over the course of time, especially the rate of
receivers of rehabilitation assistance has varied, depending on financial resources and political backing for courses and training programs, as can be seen
on Figure 4.
Figure 4
Recipients of benefits among persons entering unemployment in West Germany
1990-1997
100%
80%
60%
40%
20%
0%
23,9
10,3
8,1
30,6
7,2 7,3
29,2
6,7 7,3
27,6
6,7
7,3
31,1
4,2 7,9
34,3
3,3 9,3
32,7
2,2 9,6
32,0
1,9 10,5
57,8
54,9
56,8
58,4
56,8
53,1
55,6
55,6
1990
1991
1992
1993
1994
1995
1996
1997
Unemployment Benefit
Rehabilitation Assistance
Unemployment Assistance
No Benefits
Source: Bundesanstalt für Arbeit (1998a): 53.
The rate of recipients of unemployment benefit, unemployment assistance or
rehabilitation assistance is higher among the overall unemployed than among
those new in unemployment, since those without claims for benefits are unemployed for shorter periods than those receiving benefits.
Although many unemployed persons receive benefits, the poverty rate among
unemployed persons was 33% (by the definition of poverty as everyone under
50%-net equivalent per capita income) in 1995 in West Germany, compared to
13% average (8.8% for the employed) (Statistisches Bundesamt 1997: 523).
5. Unemployment in 1997: How Are Different Groups Affected?
Different population groups are affected differently by unemployment (Bundesanstalt für Arbeit 1998a: 52):
 Differences by sex:
Figure 5
Activity and unemployment rates of women and men
in West Germany 1970-1998 in percent
90
80
70
60
50
40
30
20
10
Activity Rate Women
Activity Rate Men
Unemployment Rate Women
Unemployment Rate Men
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1980
1970
0
Note: From 1990 on employments not subject to social security are included.
Source: Bundesanstalt für Arbeit (1998a): 101, 104; (1998b): 38.
The activity rate of men, as shown on Figure 5, has gone slightly down to
around 80%, whereas the activity rate of women - since 1991 including those
who are „marginally occupied“, not subject to social security - has come up to
around 60% where it has been stable since 1990. Until 1993, the unemployment
rate of women was higher than that of men. This changed in 1994, where men
and women had the same unemployment rate. Since 1995, unemployment is
higher among men than among women. Men have - at 11.2% - a higher rate of
unemployment than women whose rate of unemployment is 10.7% (42% of
unemployed are women). In 1997, though, the unemployment rate of women has
risen more (9%) than that of men (8%), and the actual monthly data for 1998
and 1999 show a greater unemployment of women than of men. (Bundesanstalt
für Arbeit 1998a: 102.)
 Differences by occupational status:
62.8% of the unemployed are blue collar workers, 31.2% are white collar
workers. The rate of unemployment among white collar workers has risen
slightly more (by 10%) than that of blue collar workers (7%) in 1997, but all in
all, those relations are pretty stable.
Differences by age:
Figure 6
Percentages of different groups of persons among
registered unemployed persons in West Germany 1980-1997
60
50
40
30
20
10
Women
Foreigners
Older Persons 55+
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
0
Youths under 25
Long-term (1year or longer)
Source: Bundesanstalt für Arbeit (1998a): 49; (1999a).
On Figure 6, the changing rates of different groups among unemployed persons over the course of time can be seen. Since 1981, women have made up less
than half of the unemployed.
Youths (under the age of 25) make up 12.0% of unemployed people in West
Germany in 1998. This percentage has fallen steadily from 30.3% in 1982. So
their percentage of the overall unemployment has fallen, whereas the unemployment rate of young persons has risen since 1990 (overall unemployment
rate: 7.4%, under 20´s: 4.6, 20-24 year olds: 6.1%). Their unemployment rate is
11.1% in 1997, now slightly above the overall average. Unemployment among
those under 20 is much lower (-1% to 81,500 in 1997, rate: 9.2%) than among
20-24year-olds (+3% to 280,800 in 1997, rate: 11.8%). This is illustrated on
Figure 7 as an indicator for a longer stay in the school system among youths in
times of a tighter job market, for growing problems to find apprenticeships and
for growing numbers of young people who are not employed by their training
companies after finishing their apprenticeship.
Figure 7
Unemployment rates of different groups of persons in West Germany
25
20
15
10
5
0
1992
1993
Overall
1994
1995
Foreigners
1996
Youths <20
1997
1998
Youths<25
Source: Bundesanstalt für Arbeit (1998 and 1999).
The severe and growing problems for the transition between apprenticeship
and employment are especially true for young women. Young persons carry a
very high risk of becoming unemployed (they make up 23% of those entering
unemployment), but they succeed relatively soon in ending unemployment. So
the average duration of unemployment for those under the age of 20 is 4.6
months, for those between 20 and 24 4.9 months, compared to 8.4 months for all
unemployed persons. Only 10% of under 25-year-olds have been unemployed
for one year or longer (overall average: 36%). Some 59% of the unemployed
youths had not completed an apprenticeship (men: 63%, women: 55%). The rate
of foreigners among unemployed youths is at 23% ten points higher than their
percentage among youths holding jobs subject to social security (13%).
The integration of young persons into the labour market is strongly supported
by job placement schemes. In addition to those available for all unemployed
persons, there are extra measures especially for youths. Around 200,000 young
persons are included in employment schemes and measures for youths.
Persons 55 years and above account for 22.1% (669,100) of all unemployed
persons in West Germany. Their percentage has risen from 10.8% in 1982. Older persons (45-64yrs) carry a much smaller risk of becoming unemployed than
young persons (the percentage of 45-64year-olds among those entering unemployment is 23, compared to 31% of this age group among all those holding jobs
subject to social security); but once they are unemployed, it is much harder for
them to find new employment, even if they are well qualified. Thus, the duration
of unemployment is 14.1 months, which is almost double that of the average
unemployed person. Long-term unemployment hits 54% of 45-64year-olds unemployed persons, the rate rising strongly with age. Only 31% of 45-64year-olds
ending unemployment had found a new job, compared to 45% among all unemployed persons. Thus, also older persons depend on employ-ment schemes; in
1997, around 80,000 unemployed persons above 45 or 50 years (depending on
requirements of different schemes) took part in such measures.
 Differences by nationality:
Foreigners (521,600 unemployed) have an unemployment rate that is at
20.4% more than double that of Germans at 10.0%. The main reason for that is
their comparatively low language and professional qualification. 1997 there
were 346,700 foreign men and 174,900 foreign women officially registered as
unemployed. Different nationalities are differently affected by unemployment:
The highest unemployment rate can be found among Turkish persons (24.5%),
then Greeks (19.7%) and Italians (19.6%). The lowest rate among foreigners much lower than the overall rate - is the unemployment rate of the French
(6.5%). The unemployment rate of foreigners varies greatly among German regions: it is lowest in Bavaria (15.4%) and highest in Bremen (29.8%). The rate
of long-term unemployment of foreigners is lower than the average long-term
unemployment rate; foreigners succeed in finding new employment faster or resign from the labour market and retreat to the hidden reserves earlier than German unemployed persons.
 Differences by health status:
Persons with health problems made up a quarter of all unemployed persons in
1997. Their unemployment lasted an average of 12.6 months, and 48% (almost
half!) of them have been unemployed for one year or longer. Only 29% ended
their unemployment by finding a new job. Severely disabled persons (163,900)
had an unemployment rate of 17% (overall average: 11%).
 Differences by country of origin among Germans:
Immigrants of German origin pose a special problem on the German labour
market. Most of them have a very limited knowledge of the German language,
and their qualifications were acquired in economic systems that differ greatly
from the German one. Some 98% of 1998 immigrants of German origin have
lived in countries of the former Soviet Union before, 1.3% came from Poland,
0.5% from Romania. Their unemployment rate cannot be calculated because
they are counted as German nationals in the statistics. The numbers of registered
unemployed immigrants of German origin have gone down since the beginning
of the 90´s - as have the overall numbers of immigrants of German origin to
West Germany (almost 400,000 in 1990, around 175,000 between 1991 and
1995, falling to 107,535 in 1997). The number of unemployed immigrants of
German origin has varied between 130,000 and 160,000 and is at 131,890 in
September 1997. Other 60,000 have begun German language courses. This
number has gone down continuously since the peak at 175,000 in 1990. About
25,000 have started vocational training.
 Differences by qualification:
About 44% of the persons entering unemployment in 1997 had no completed
apprenticeship and were unskilled labourers. Their percentage among those in
jobs subject to social security is 24%. The duration of their unemployment is at
9 months only slightly longer than the average duration of an unemployment of
8.4 months. Only older, unskilled unemployed persons make up a high percentage of all unemployed persons (the unemployment rate of unskilled persons was
20% in 1995). Of those unqualified persons who end unemployment, only 36%
find a new job. Almost 100,000 unskilled persons took part in training and qualification measures.
 Differences by the duration of unemployment:
A great problem on the current labour market is the growing number of
long-term unemployed persons, those who have been unemployed for one year
or longer. They make up more than a third of all unemployed persons (34% in
1997, even 37% in 1998). The percentage of long-term unemployment was at
12.9% in the early eighties and has risen and stayed between 25% and 34% from
1983 onward (compare Figure 7). In 1997, the rate of long-term unemployed
women was 35%, that of long-term unemployed men was 33%.
Table 1
Long-term unemployment among different groups of unemployed persons
in West Germany in 1997 in % (September 1997)
Groups
Overall
Men
Women
Germans
Foreigners
White-collar Workers
Blue-collar Workers
Unqualified
Completed Apprenticeship
With Health Problems
Severely Disabled Persons
Youths <20
Youths 20-24
Persons 45-49
Persons 50-54
Persons 54-59
Persons 60-64
Rate of Long-term
Unemployment
36,1
36,0
36,1
36,9
32,2
33,9
37,4
38,0
34,4
48,3
50,8
3,5
10,3
40,4
48,7
62,5
54,5
Source: Bundesanstalt für Arbeit (1998a): 131.
The September numbers in Figure 8 show slight variations from the yearly
average. The percentage of women among long-term unemployed persons is
higher than that among all unemployed. Persons 45 years and above (54%) and
persons with health problems (48%) are the groups that are most affected by
long-term unemployment. Also, certain regions with specific structural problems
carry a greater risk for higher long-term unemployment. Around 140,000
long-term unemployed persons took part in employment or qualification
measures.
The growing numbers and rate of unemployed persons in Germany in 1997
are mainly the result of a greater percentage of persons in long-term unemployment. The average duration of unemployment in West Germany was 32 weeks
in 1997, two weeks longer than in 1996. (Bundesanstalt für Arbeit 1998a: 56).
The average duration of unemployment for men is 30.8 weeks, while women are
unemployed for an average of 34.5 weeks (Bundesanstalt für Arbeit 1998a: 104,
106). But even with a shorter duration of average unemployment - it went down
to 30 weeks in 1998, the rate of long-term unemployed persons has risen again
in 1998.
6. What Becomes of the Unemployed?
In 1997, 4,926,303 persons registered as newly unemployed in West Germany
(about 40,000 less than 1996), while 4,822,865 persons ended their unemployment (200,000 more than 1996). Some 45% of those ending unemployment have
found a new job (one third through employment office-activities, two thirds
through their own initiative). Other 2.52 million persons took other options: retirement
(estimated
136,800),
disability
-pension
(66,000),
Non-Availability-Privilege, applicable for persons 58 years and above
(129,700), vocational training measures (Aus- und Fortbildung, 259,200); of the
others, probably many receded to the hidden reserves (Bundesanstalt für Arbeit,
1998a: 54, 62).
Figure 8
Persons Ending Unemployment in West Germany Enter
100%
90%
80%
39,5
48,5
48,2
49,3
7,2
10,7
9,2
26,0
27,0
16,7
15,1
14,5
15,7
1994
1995
1996
1997
50,4
52,3
10,0
6,2
22,0
26,0
27,6
17,6
15,6
1992
1993
70%
48,2
60%
11,7
50%
40%
6,7
25,4
30%
29,4
20%
10%
23,4
0%
1991
New Employment: Employment Office
Vocational Training, Rehabilitation
New Employment: Own Initiative
Unknown
Source: Deutscher Bundestag 1998: 85.
The re-employment rate of men is higher (49.7%) than that of women
(38.2%).
In recent years, the rate of those ending unemployment with unknown destination was around 50%. In 1991 this rate was 39.5% (see Figure 9).
So, large groups have problems in finding and keeping their jobs. The greatest problems have those with no or low qualification (including language deficiencies), with health impediments, or older persons. It is a great challenge to
society to educate and qualify persons from the beginning and keep up a
life-long learning process.
7. Which strategies are most useful for coping with this challenge?
Since the current situation is bad enough, and rationalisation is only just beginning in the service sector, unemployment is likely to become an even greater
problem in the near future. Experts have different proposals on how to do deal
with that challenge. Different approaches are being discussed. Two very divergent ones among them shall be shortly introduced here:
 The first one is a late-Keynesian approach that calls for a reduction of
working hours, an expansion of personal services, a reduction of income inequalities through different tax and income strategies. It also calls for reforms in
educational, innovation, industrial and labour market policies. A greater involvement of government and the state should enlarge paid labour
(Memo-group: Hickel ).
 The opposite approach is being followed by a commission reporting to
Saxony and Bavaria: It calls for a greater individual responsibility, mobility, and
flexibility, for a substantial reduction of the average income and thus of the
standard of living for most of the population, for an increase of personal services, and for a reduction of individual labour market activity, thus paid work
(but an increase for „rewarded“, thus voluntary, work, civil work) (Kommission:
Miegel, Beck).
German politicians are reacting to the current challenges by encouraging a
treaty for labour between unions and employers. Considering the enormous effort needed, it is probably too little - the problem about doing more would definitely be to decide which way between those radical strategies to chose, and find
support and backing by a majority of the population. Among the population,
discussions have not even begun.
NOTE
1
An open question was used that could be answered by one or two entries: 83%
for unemployment in December 1998, 75% in January 1999
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BUNDESANSTALT FÜR ARBEIT (Ed.) (1998a): Amtliche Nachrichten der
Bundesanstalt für Arbeit (ANBA). Sondernummer: Arbeitsmarkt 1997, 46.
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BUNDESANSTALT FÜR ARBEIT (Ed.) (1998b): Amtliche Nachrichten der
Bundesanstalt für Arbeit (ANBA). Sondernummer: Arbeitsstatistik 1997 Jahreszahlen, 46. Jahrgang, Nürnberg: 31.8.1998.
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Januar 1999.
BUNDESANSTALT FÜR ARBEIT (Ed.) (1999b): Die Entwicklung des Arbeits-
marktes im Januar 1999. Pressemitteilung Nr. 06/99 vom 09. Februar 1999.
BUNDESANSTALT FÜR ARBEIT (Ed.) (1998 and 1999): Referat IIIa4. Arbeitsmarktstatistik. Various Data on the Labor Market in Germany. Also available through the Internet (www.arbeitsamt.de).
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Bonn: Drucksache 14/73, 20.11.98.
FORSCHUNGSGRUPPE WAHLEN (1999): Die wichtigsten Themen im Januar.
Mannheim.
STATISTISCHES BUNDESAMT (Ed.) (1997): Datenreport 1997. Zahlen und
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