May 24, 2017
Long-term unemployment – a major challenge for the German labor market
Formerly known as “sick man of Europe”, with mass unemployment and nearly five million people without jobs, Germany has undergone a remarkable change over the last decade. Today, unemployment is well below the three million threshold and employment rates are at an all-time high. However, in spite of this positive development, there are still the ones left-behind: Long-term unemployment is the major challenge for the German job market policy.
Long-term unemployed and no way out?
In Germany, a person who is unemployed for more than 12 months is considered long-term unemployed. Between 2005 and 2011, the number of long-term unemployed people went down from nearly 1.8 million to about 1 million. The carrot and the stick approach of the so called Hartz reforms is critical in these efforts. The Hartz reforms included reducing the eligibility for unemployment benefits – an effective means to increase incentives to take up employment. Although long-term unemployment decreased sharply in the first years after the Hartz reform, the dynamic of dropping long-term unemployment numbers came to a halt in the last few years. Until today, re-integrating the people concerned into the German labor market remains one of the major challenges for policy makers and business. What we need is an overall concept for preventing and reducing long-term unemployment paired with flexibility and low entry barriers for the labor market.
Bavaria – best employment prospects
Despite the positive overall situation, there are major regional differences in the German job market. Especially in Southern Germany, the employment prospects are quite good, in particular in the Free State of Bavaria. There, unemployment rates are comparatively low while in other parts of Germany, as for instance in Eastern Germany, the rates are significantly higher.