Andrea Nahles: The labor market is lacking economic tailwind

Dhe economic slowdown in Germany is also increasingly putting pressure on the labor market. “The weak economic environment is dampening the labor market, but overall it appears to be robust,” said the head of the Federal Employment Agency (BA), Andrea Nahles, on Thursday in Nuremberg.

Unemployment and underemployment increased in February, while companies' demand for new workers fell. According to the BA, the number of unemployed rose to 2.814 million in February. That was 8,000 more than in January and 194,000 more than a year ago. The unemployment rate remained at 6.1 percent.

There is no recovery in February

The labor market was weaker in February than usual for the time of year. “Unemployment numbers often fall in February,” said Nahles. “That is not the case this year.” The increase occurred because the labor market lacked the economic tailwind. Taking seasonal fluctuations into account, the number of unemployed increased by 11,000 month-on-month, according to the BA. Economists surveyed by Reuters had expected a seasonally adjusted increase of 7,000 unemployed people.

As a result of the weak economy, many companies continue to resort to short-time work, in which the BA covers part of the wage costs. According to the authority, 175,000 employees received economic short-time work benefits in December. That was 11,000 fewer than in November. The notifications for expected short-time work were significantly higher in February than a year ago.

Demand for labor with significant losses compared to the previous year

“The effects of the weak economy on the labor market can also be clearly seen in the demand for labor,” said Nahles. “In a long-term comparison, it is still at a high level,” said Nahles. “Compared to the previous year, however, there have been significant losses.”

With 706,000 jobs registered with employment agencies, there were around 72,000 fewer than a year ago. The actual number of vacancies is likely to be much higher, as many employers do not report job vacancies to the employment agencies at all.

According to the BA's initial calculations, the number of employees subject to social security contributions fell back below the 35 million mark in December. “But that’s a seasonal pattern in winter,” said Nahles. “That is not surprising.” Compared to the previous year, 214,000 more people were in employment subject to social security contributions.