"Jobs are being created en masse in the care sector"

The new director of the Institute for Employment Research is fairly relaxed about the economic difficulties. Over the long term, says Bernd Fitzenberger, it's important that sufficient immigrants come to Germany.

The Institute for Employment Research (IAB) conducts research on the labour market, examines policy measures and advises political stakeholders. It is part of the Federal Employment Agency and its opinions are regarded as important and independent.

The institute has had a new boss in place for two months, and his name is Bernd Fitzenberger. The trained economist has moved from Berlin to Nuremberg for the new job. On the telephone, he explains how precarious the current economic downturn actually is for employees as well as the importance of immigration.


You have taken charge of the IAB at a time which has seen an end to the many years of positive news from the labour market. Do you like your new job?

Bernd Fitzenberger:

There are certainly enormous problems to solve in the labour market which would make things interesting even if the employment situation had been strong. The fact the situation has now worsened of course brings additional issues. It would obviously have been preferable not to have the risk of a recession. That said, our forecast indicates more of a moderate slow down. At the moment there's one piece of bad news after another coming from industry, most recently the automotive supplier Bosch announced further job cuts.

Are employees at risk, or will the job miracle survive the crisis?

Both are correct. There are significant job losses in the automotive industry and in the temporary work sector in particular. For Baden-Württemberg, for example, we are therefore forecasting a slight rise in unemployment by 6,000, and for Germany as a whole there might also be a slight rise in 2020. However, in terms of magnitude these increases really are minimal. There is huge momentum behind employment growth in large parts of the labour market, in particular in the public sector, in services and in the care sector.

Do you not expect to see a significant increase in short-time working?

In August we had 54,000 people in short-time working compared to, at times, 1.4 million in 2009 (at the time of the economic and financial crisis – comment from editorial team). Over the coming months, the number of short-term workers will certainly not remain as low as it is at the moment. As unpleasant as this might be for the companies and employees concerned, on balance there is no cause for panic.

Does the payment of short-term working benefit need to be extended?

A general increase does not currently appear necessary. However, a regulatory mechanism giving companies the opportunity to increase it for a time given a sudden downturn in the economy would not be a bad thing.

Besides the weakness in the economy, the structural change is also a strain on many companies. Who stands to suffer most from this?

Besides the current problems in the automotive industry, the finance and insurance sectors, for example, have seen a downward trend over a long period. However, this is offset by sectors in which new areas of employment are being created. For many companies there is light at the end of the tunnel. For this reason they will not let their skilled workers go. This stockpiling of employees did much to cushion the impact of the major economic crisis ten years ago. Today, the same industrial sectors are affected, however nowhere near to the same extent as back then, and today the skilled worker shortages are much greater.

However, there's already a fall in temporary workers.

Correct, the very purpose of temporary work is to enable flexibility. At the same time, however, we have the shift into the service sector. Jobs are being created en masse in the care sector.

Is retraining a temporary worker for the care sector realistic?

Switching from work in engineering or in the automotive industry into the care sector is obviously not commonplace. However, in individual cases it might still work.

For individuals who have been unemployed over a long period, the 'social labour market' has been available since the start of the year. By the end of June 21,300 long-term unemployed individuals were placed in publicly-funded jobs. Has the €4 billion made available for the programme been well invested?

There has not yet been any economic impact analysis, but there's lots of positive feedback from job centres. The placement officers are now able to provide people with very different offers. This suggests that, as a tool, this is having a big effect. For children, for example, it is very important when a parent returns to normal working life after a long period. For me it is a fascinating programme because it is doing something to break up the group in persistent long-term unemployment. However, in view of the cost involved, this is certainly no magic bullet.

If training the long-term unemployed does nothing to relieve the shortage of skilled workers, then which groups are more relevant?

There are still, of course, lots of unemployed people who haven't been unemployed for so long. There's a lot of potential here. Women and the elderly might also take on a greater role in the labour market. And migration is very important. Over the coming year we expect almost constant labour force participation despite continuing net immigration, in other words although more people are arriving in Germany than leaving. However, this will probably reduce over the coming years. Because our neighbouring countries have emerged from the crisis, many people are also returning to their homes.

We need an annual increase of 400,000 people in order to maintain the current number of persons in gainful employment over the long term. Production may otherwise no longer take place in Germany. However, it is not easy to ensure 400,000 annual new immigrants on an ongoing basis.

Why is this?

Qualifications are often not comparable. And we know that language skills in particular are also important. People who, for example, come from countries where there's a Goethe Institute have better chances of success on the German labour market. They speak better German and are better informed.

What's the situation with the integration of refugees?

The latest figures show that we have an employment rate of 38 percent among refugees who have arrived since 2015. Of these, 82 percent are required to pay social insurance contributions. That is pretty successful. The refugees of course frequently take on unskilled or semi-skilled tasks and are therefore more heavily affected by economic risk. However, many make use of their qualifications from their home country. 48 per cent of employed refugees perform a skilled-worker activity, and 5 per cent work as specialists and experts.

What do you think about increasing the minimum wage in the current situation? The German Trade Union Federation (DGB) and the SDP are looking for €12 instead of €9.19.

We were in the fortunate situation that the minimum wage was introduced in 2015 at a time of a strong labour market. Concerns that there would be employment problems were not borne out. A jump to €12 would be critical and could increase unemployment. Despite this, if policy-makers still go for such a significant increase, then it would be certainly advisable to at least implement this with a time delay. Twelve euros immediately is certainly more precarious than twelve euros by 2022. If the increase is gradual, you can always make adjustments and suspend the next rise. This would also give the economy time to adjust.

What else does the economy need to be ready for?

Vocational education and training must continue to develop. The system is eroding very slowly despite all the admiration it enjoys around the world. The proportion of companies offering training is slowly declining, and the proportion of trainees is falling. This is due to academisation. but there are still some young people who are unable to start training at all, even though in many regions there are more positions than applicants. We need vocational occasional education and training which, in view of digitalisation, highlights long-term prospects, and which makes people resilient in the face of technological change.

Source: German newspaper Welt am Sonntag, revised by iMOVE, April 2020