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More Jobs, More Jobless

2 minute read

There have been waves of bad job news out of Germany lately — unemployment in February reached 5.2 million, the highest level since World War II. But read the fine print: Germany created thousands of new jobs last year, too. According to the Federal Statistical Office, 261,000 jobs were created in the last quarter of 2004 alone.

How can unemployment and employment go up at the same time? It’s simple: the employment pie got larger, as did the unemployment slice. Many of the new jobs went to people not traditionally in the job-seeking pool. The trend was toward more part-time work and fewer permanent, full-time jobs, and most of the new jobs were in the service sector. Those service sector gains more than offset the job losses in manufacturing, farming and construction.

Faced with the threat of job losses, unions have also recently agreed to contracts with lower unit labor costs for employers. “The rising jobs figures suggest that firms will hire staff if labor costs fall,” says Michael Feil of the Institute of Labor Market Research in Nuremberg. The Institute expects job gains again this year. And there was another positive statistic last week: 395,000 job vacancies in the first two months of the year. Not enough to help 5.2 million unemployed, perhaps, but it’s a start

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