Why do so many people in Germany have work?
Why do so many people in Germany have work?
Economist meets Photographer / #38
P: Good morning, Economist.
E: Good morning, Photographer.
P: Today’s news is packed with bad news.
E: As always.
P: Do you have any good news for me?
E: Sure. Check this chart.
P: Explain.
E: The black line shows the number of people employed in Germany over time. The red line indicates the number of unemployed.
P: A welcome development, right?
E: Unemployment has been falling in Germany since the mid-2000s, while the number of employees has increased. No financial crisis, not the introduction of a minimum wage, nor Corona has been able to stop this development.
P: Why this positive development?
E: Many women have entered the labour market. This is due to the improved framework conditions, such as improved childcare. In addition, the generally positive economic situation in recent years contributed to that situation.
P: And what is the effect of the currently high inflation?
E: Not the inflation, but the fight against inflation has a negative impact. The central bank's high interest rates are putting pressure on the economy—the result: a small recession in Germany and a slight increase in unemployment.
P: Can you be a little more precise?
E: The seasonally adjusted jobless rate rose to 5.7 per cent in June from 5.6 per cent in the previous month. The number of unemployed is 192,000 higher than in June 2022.
P: So a negative development.
E: The days of high interest rates will end; and the economy will recover, I assume.
P: The Economist assumes.
E: Anything else would surprise me.
< silence >
P: What makes you so optimistic?
E: The past. Economic growth in Germany tends to only go in one direction. The economy in Germany grew by an average of 3.1 per cent per year from 1950 to 2022. However, growth has slowed over the last few decades. On average, in the previous two decades, from 2000 to 2020, gross domestic product, called GDP, grew by only 1.0 per cent per year in real terms.
P: Why is that?
E: The matter is complex. Can we talk about this another time?
P: OK. Have a nice day, Economist.
E: You too, Photographer.
Economist & Photographer sometimes go their own ways – the economist here, the photographer there.
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