German Unemployment Rate Declines

The Bundesbank announced today that the Registered unemployment rate in Germany declined in November to 8.1% from 8.2% in the preceding three months.  At the same time, Eurostat reported harmonized unemployment rates for October.  On that basis, the German unemployment rate began to decline a month earlier, to 7.5% in October from 7.6% in September.  (Germany's national measure of unemployment is typically greater than that of the harmonized measure of Eurostat as can be seen in the first chart.  Part of the difference is due to the fact that the national measure includes only registered workers while the Eurostat measure includes the whole labor force. In addition there are differences in the unemployment concept.)

Except for Japan where the unemployment rate declined to 5.1% in October from 5.3% in September, most other industrial countries are still experiencing rises in unemployment.  In addition, the rise in the unemployment rate in Germany during the recession was more muted than that in other industrial countries--even Japan--as can be seen in the second chart.  (To insure comparability we have used harmonized unemployment rates.  These may be found in Haver's  EUROSTAT data base.)

Germany's lower unemployment rate has been due largely to the "short-term work program" part of its stimulus program.  To encourage companies to maintain employees when production falls off, the German government has set up a fund which can be drawn upon to help pay the wages of the employees who have been kept on.  On November 25, the Cabinet agreed to extend the program for another year beginning in January.