Economic Development in February-March 2012
Economic Development in February-March 2012
Economic development:
· while Spain reports a record unemployment rate of 22.8% (>5million in search of employment), Germany reports a record tax revenue for December: EUR 71bn; EUR 527bn for the entire year, +7.9% year-on-year. The Kiel Institute for the World Economy estimates that this could enable the Finance Minister to reduce new debts by more than 9bn euros to EUR 17bn and fund the bringing forward of the ESM as well as transfer the first two tranches into the fund. As the social security insurances profit from high employment rates as well, their reserves are well stocked, too.
· Seasonally adjusted, unemployment has decreased by 34,000 to 2.85 million (6.7%) in January, the lowest level since German unification in 1991. In nominal terms, the number of people registered as unemployed rose to 3.08 million, equivalent to an unemployment rate of 7.3%. Despite the upswing, long-term unemployed still have problems finding a job: out of 1.4million people who had been unemployed for more than 1 year and left the unemployed status last year, only 208,000 (14.9%) found a job on the regular labor market. 35% were incapacitated for work, 11.1% no longer considered to be seeking a job “due to lacking availability or cooperation”, 23% profited from labor market policy measures (subsidized wages, workfare programs or training programs). Long-term unemployed account for 35% of all unemployed, their number only diminished 3% (-31,000) last year; half of all long-term unemployed have not completed professional training, and most of them are over 50.
Employment: the number of people with jobs subject to social security contributions who hold a second (mini) job is on the increase; up 5.9% within one year to now 9%. Main factors contributing to this development: more and more jobs are poorly paid; and more and more people only manage to get part-time jobs.
US budget cuts: due to budget cuts, the US Army is to withdraw two army brigades from its headquarters in Grafenwöhr/Bavaria and Baumholder/Rhineland-Palatinate. The withdrawal is a blow to the communities around the headquarters as their economies depend heavily on the American troops.
Euro crisis: Chancellor Merkel has traveled to China with a large business delegation and members of parliament from all major political parties; fifth visit to China since becoming chancellor in 2005. Wants to encourage Chinese investors to invest in the EU and Germany. Experts say China considers Merkel the only mature partner within the EU; trust the Germans even if they constantly address the human rights issue. China is Germany’s most important trade partner; exports to China have doubled over the past three years.
Inflation rate: for the first time in a year, the inflation rate has dropped to 2% (December: 2.1%). The 2011 average inflation rate was 2.3%.
Apprenticeships: the German Chamber of Industry and Commerce reports that 71,300 additional places for apprenticeship have been created in 2011, with 43,600 companies offering them for the first time. Number of apprenticeship contracts increased by 4% to 540,000. A growing problem, apart from the unfavorable demographic development with its decreasing number of high school graduates, is the increasing number of graduates considered insufficiently trained to start an apprenticeship. 75,000 apprenticeship vacancies could not be filled, mainly in the catering, retail and crafts sectors.
Office of Labour Affairs, Royal Thai Embassy, Berlin
March 2012
