Unemployment set to fall to 3.4 million in 2008

According to current labour market projections by the Institut für Arbeitsmarkt- und Berufsforschung (IAB) the number of unemployed people is to fall to about 3.4 million on average in 2008. This would be a drop by 360.000 as compared to 2007. At the same time the IAB expects the German economy to grow by 2.7 percent in 2007 and 2.5 percent in adjusted for price figures.

The number of gainfully employed people is expected to rise to 40.03 million thus exceeding this year´s number by 310.000, while the number of people with jobs subject to social insurance contribution increased by 270.000. According to the labour market researchers from Nuremberg, the current upward trend is even more promising than that of the years 1999 and 2000.
In 2006 and 2007 more full-time jobs were created than in 1999 and 2000 when many jobs not subject to social insurance contribution and parttime-jobs were generated. Thus, the current economic revival benefits many more employees than in 1999 and 2000, says the IAB.

Total underemployment, i.e. the official unemployment rate plus the so-called hidden reserve is expected to fall to 4.7 million in the year 2008 according to the IAB. This would correspond to 1.5 million less unemployed people or a drop by 24 percent as compared to the year 2005 when in the wake of the Hartz-IV-labour market reforms unemployment and wellfare benefits were pooled together to the Arbeitslosengeld II. The IAB believes that unemployment will fall to its lowest leves in 17 years.

Since 2006 the situation on the labour market has constantly improved. The IAB states three reasons for this development: Firstly, the positive economic development has affected the labour market. Secondly, moderate wage rises over recent years has led to new jobs and thirdly the labour market reforms have had a positive effect on unemployment figures. Therefore the IAB also expects unemployment to keep falling in the long-term.

All IAB labour market projections are available for download. GERMAN