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Monday
Feb272012

German Unemployment Obfuscation

One of the hardest things to get in this world is a truthful, or at least a somewhat realistic, or at the very least a not totally fabricated unemployment number, but every country has its own bureaucratic madness in pursuing obfuscation. And Germany is no exception. Official unemployment—3,081,706 unemployed and an unemployment rate of 7.3%—dropped to a two-decade low in January, but a recreational dive into the Federal Labor Agency’s monthly report (Monatsbericht) reveals another story.

The numbers were touted by politicians in the governing coalition, from Chancellor Angela Merkel on down, amid media hyperventilation about Germany's superior economic model, though dark clouds have already appeared. Read.... “German Success Recipe” or Blip?

Even French President Nicolas Sarkozy, who is struggling to hang on to his job for another five years, is obsessed with Germany’s mysterious success in bringing down its unemployment rate and can’t help but mentioning it every time he speaks about fixing the French economy. But the Federal Labor Agency’s monthly report reveals many pages into it—surprise, surprise—that the headline numbers issued with unrounded Teutonic precision have only a tenuous relationship with reality.

Turns out, certain groups of unemployed people are systematically excluded from the official unemployment numbers, though they’re listed in the monthly report and are known—unlike the inscrutable statistical adjustments meted out in the bowels of the US Bureau of Labor Statistics. On second thought, statistical adjustments must also be taking place in Germany because the numbers still don’t add up. These are the excluded groups:

- Participants in “select measures of active labor market policies,” such as obtaining qualifications and professional training: 1,075,004.

- Participants in “activation” and “job integration” programs: 127,742

- Those in “preretirement-like ruling (special status)”: 106,973

- Participants in government-paid job training: 154,648

- People who are called in inimitable German, "1-Euro-Jobbers." They perform tasks that are deigned communally useful, such as clearing snow from city streets in Leipzig: 133,298.

- Participants in language courses, integration courses, and other programs that are funded by agencies other than the Federal Labor Agency: 72,513

- Participants in citizens jobs programs: 21,823

- People who are difficult to find jobs for: 9,533

- Unemployed who are temporarily sick: 68,202

In total: 1,701,534.

Added to the headline number of the officially unemployed (3,081,706), we get a total of 4,783,240. And it does not include the underemployed who are stuck in part-time jobs but are looking for full-time jobs.

Alas, in January, 5,394,064 people actually received unemployment compensation. So clearly, I must have missed a few categories.

But it gets even worse: People 58 and older are excluded from the official unemployment numbers, even if they're desperately looking for a job. They don’t receive unemployment compensation but, conveniently, pre-retirement compensation. So they don't count for the simple reason that they're too old to count. That’s the German baby-boom generation. They're turning 58 in massive numbers and fall unceremoniously off the unemployment lists. In September 2011, the last month for which official numbers were available: 374,592.

Add them to the 5,394,064 official recipients of unemployment compensation to obtain 5,768,656.

And what about those who aren’t eligible for unemployment compensation? While they receive “social aid” and other forms of support, they don’t count as unemployed.

So, like in the US, the actual number of unemployed people and the actual unemployment rate remain a mystery, despite the confidence-inducing but false sense of accuracy that these grotesquely unrounded numbers provide. And in the end, unemployment in Germany is probably close to double the official headline number.

But in the US, unlike in Germany, a hullabaloo broke out after the BLS reported that a surprisingly robust 243,000 jobs were created in January, and that the unemployment rate had dropped to 8.3%. Cynics, academics, BLS heretics, BLS true believers, hype mongers, and politicians waged a media battle over these numbers that President Obama serenely trotted out as validation of his policies. Even Rush Limbaugh jumped into the fray. But now, for February, a whole new debacle is brewing. Read.... Suddenly, a Sharp Deterioration in the Job Market.

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Reader Comments (5)

The closest we will get to a true picture is the total number of \\\"employed\\\" versus the total population of the country, i.e. the % employed. These numbers are less precise than a true unemployment number but they are also more difficult to fudge. I'll take a less precise but honest number over an exact but fudged number any day of the week.

When you look at the USA employment % trend for the last few decades the truth is hard to ignore.

http://data.bls.gov/generated_files/graphics/LNS11300000_28209_1330442390918.gif
February 28, 2012 | Unregistered CommenterRich V
Rich - I agree that the employment participation ratio gives a better idea of what is going on, though it doesn’t tell you the ratio of people who want a job but don’t have one.

I have written about this this issue before, for example, “In the Bowels of the Job Report: 15.4 million missing jobs.” Here is the post:
http://www.testosteronepit.com/home/2011/9/2/in-the-bowels-the-jobs-report-154-million-missing-jobs.html

The question remains why governments go through such lengths to understate unemployment statistics.
February 28, 2012 | Registered CommenterWolf Richter
1. "That’s the German baby-boom generation. "

That´s wrong. The german "baby boomer" were born 1955-1965.

2. "People 58 and older ..."

IIRC was this an offer for people, who became "58" before 01/01/2008. We´re talking about people born before 1949, people who are now 63 an older.

3. "...even if they're desperately looking for a job."

No. They CAN (could) decide, if they want(ed) to get the higher(!) pre-retirement compensation. This offer was so attractive, that even a quite famous journalist had chosen to leave the public broadcasting system to "stay at home".
March 7, 2012 | Unregistered Commenterderherold
derherold - I don't know where you got your definition of "baby-boom generation." I'm part of it, and it started years before 1955. 44 people in my class in Gymnasium. Instead of 20.

"People 58 and older" ... look up the numbers. They're all there.

#3: Agree, they could decide. But the point is that if they couldn't find a job, they didn't count as "unemployed" but as per-retired, therefore understating the unemployment figures.
March 7, 2012 | Unregistered CommenterWolf
Well that didn't take long....

http://www.bls.gov/generated_files/graphics/LNS11300000_28209_1330442390918.gif

now shows:

Sorry, the page you're looking for can't be found;
/generated_files/graphics/lns11300000_28209_1330442390918.gif

Please enter a keyword(s) in the search field below. Or, try one of the links.

:-o
March 8, 2012 | Unregistered CommenterTheSpiritOfTheTimes

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