Good work and equitable participation

Good work and equitable participation

Good work not only provides financial security, but is also an essential prerequisite for a good quality of life and participation in society. Fair pay, a secure job and regular working hours – these were some of the key issues addressed in the national dialogue. Other topics of almost equal importance were job satisfaction and a good working environment.

Good work not only provides financial security, but is also an essential prerequisite for a good quality of life and participation in society. Fair pay, a secure job and regular working hours – these were some of the key issues addressed in the national dialogue. Other topics of almost equal importance were job satisfaction and a good working environment.

My work should offer me good prospects; I’d like to know that I will receive adequate pay with opportunities for a successful future in my profession.
from an online response submitted on 26 September 2015

Reduce unemployment

Unemployment has a major impact on wellbeing. It not only affects people who are unemployed, but also their families. In the national dialogue, the participants stressed the importance of preventing unemployment.

The unemployment rate is key to describing labour market trends. It shows how many people are seeking work and are registered unemployed with the Federal Employment Agency in a given month. In December 2017, less than 2.4 million people were unemployed in Germany. This corresponds to an unemployment rate of 5.3 per cent.

The unemployment rate in Germany has fluctuated sharply at certain times over the last 20 years. During this time, two historical highs were followed by significant declines in the unemployment rate. During the first peak period, in 1997, nearly 4.4 million men and women were registered as unemployed. In January 2005, unemployment rose above the 5 million mark, partly because welfare recipients who are fit to work were included in the statistics for the first time. The unemployment rate fell in the following years, helped by labour market reforms, investment and industrial competitiveness. Even the global financial crisis did not affect the positive trend in the German labour market. The unemployment rate has halved since the historic peak of 2005. In 2016, it was at its lowest rate since German reunification with an annual average of 6.1 per cent.

Average annual unemployment rate

Regional differences in unemployment rate: Despite the sharp fall in the number of unemployed, there strong regional differences prevail. The darker the colour on the map, the higher the unemployment rate in that district. The city of Gelsenkirchen had the highest unemployment rate in Germany at 14.7 per cent. Eichstätt had a rate of just 1.4 per cent.

Regional unemployment hotspots may shift, but regions of Eastern Germany continue to be more severely affected by unemployment than most areas of Western Germany. In 2016 the unemployment rate in Western Germany was 5.6 per cent, while it reached 8.5 per cent in the East.

Select your municipality or city:

The dots represent the 2016 unemployment rate for almost 400 districts and cities – left to right, from the lowest to the highest unemployment rate. Every interactive dot stands for a district or city.

What has been the trend in unemployment since 2005? The transparent dots provide a comparison of the unemployment rate in districts and cities for 2005. All the dots are above the line. This means that the unemployment rate has gone down in all districts cities.

In Eastern Germany the unemployment rate fell most sharply between 2005 and 2016. However, this fall was from a very high level – from almost 19 per cent in 2005 to 8.5 per cent eleven years later.

In Western Germany there was also a decline in the unemployment rate, from almost 10 per cent in 2005 to 5.6 per cent in 2016.

Sharpest falls in unemployment in Eastern Germany: The 40 districts and towns with the sharpest fall in unemployment are all in Eastern Germany. The Kyffhäuser district in Northern Thuringia saw the largest fall from 24.7 to 9.9 per cent between 2005 and 2016.

Lowest unemployment rate in Bavaria and Baden-Württemberg. The 40 districts and towns with the lowest unemployment rate in 2016 were all in Bavaria and Baden-Württemberg. In the districts of Eichstätt, Pfaffenhofen a.d.Ilm and Erding unemployment is below 2 per cent.

Highest unemployment not only in Eastern Germany: In 2005, 37 of the 40 districts and cities with the highest unemployment rates were in Eastern Germany, but a regional shift had taken place by 2016. Of the 40 districts and cities with the highest unemployment in 2016, only 20 were in Eastern Germany, twelve in North Rhine-Westphalia, three in Lower Saxony and two districts in Rhineland Palatine and one district each in Bremen, Hessen, and the Saarland.

Source: Ongoing spatial observation by the BSSR, statistics by the German Federal Employment Agency.
Geometry: © GeoBasis-DE / BKG 2016.

Youth unemployment remains low

The federal government is particularly focused on fighting youth and long-term unemployment. The average number of young unemployed individuals between 15 and 24 years in 2016 was 5.3 per cent and hence well below the rate for the general population. In comparison, the rate in 2008 was still at 7 per cent. The German vocational education and training system, known as the dual training scheme, makes a major contribution to preventing youth unemployment. However, for many countries in the European Union the global financial crisis has once again had a major negative impact on opportunities for young people in the labour market.1

Youth unemployment

Continue to reduce long-term unemployment

Long-term unemployment

Long-term unemployment is the term for people who are continuously unemployed for one year or more and who have registered as unemployed. The number of long-term unemployed has dropped sharply over the last ten years; in relative terms it has fallen more dramatically than overall unemployment. However, in 2016 the number of long-term unemployed fell below one million in Germany. More than one in three unemployed people (36.9 per cent) were long-term unemployed. One participant in the national dialogue hoped "that every unemployed person should be given an opportunity to show what they can do". The federal government is also pursuing this goal.

What Does the Government Do?

Fighting unemployment has always been a key priority of the federal government. For example, in 2015 it set up two special programmes for the long-term unemployed. Job centres help them in so-called ABC Networks (German abbreviation for Activation, Counselling and Opportunities) to improve their chances of getting a job. All of these measures are aligned with the principle of "support and challenge" (Fördern und Fordern).

Enabling all people to participate in the labour market

Participants in the national dialogue felt it was important to be involved in working life, to have opportunities and be treated equally.

It’s important that all people should be able to work and do something meaningful up until old age. Every person should have the feeling that they are needed.
from the national dialogue event at Lebenshilfe in Kellinghusen on 27 April 2015

The accepted indicator for participation in the labour market is the employment rate. It supplements the unemployment rate and reflects people's general preference and actual opportunities to take part in working life.

Since reunification, the employment rate has increased from 70.4 to 78.4 per cent. Almost four out of five people in Germany aged 20 to 64 are working. Two reasons for this trend are particularly important: There are more and more highly educated women and more women in work - particularly in the West German federal states. Women in Western Germany are gradually closing the gap with respect to the higher female labour market participation in the East German federal states. Overall, employment among women has increased substantially since 1991.

Employment rate of persons aged 20-64 by gender

The same applies to people with migration background: Their employment rate rose significantly between 2005 and 2016. Nevertheless, clear differences between people with and without migration background persist. These differences are less pronounced for men than they are for women. In 2016 the employment rate of men with migration background was eight percentage points below the rate of men without migration background. The employment rate of women with migration background was 62 per cent, which is more than 15 percentage points lower than that of women without migration background.

The importance of successfully integrating individuals with a migration background into the labour market has increased given the high number of refugees who came to Germany in the recent past. It is important to help refugees by providing opportunities to learn German, get education and vocational training, and by recognising professional qualifications gained in their countries of origin.

Employment rate of persons with migration background

The employment rate for people with disabilities has also gone up over the last ten years or so, with a rise of around eight percentage points between 2005 and 2013. But there is still a lot to do to close the gap between people with and without disabilities. Men and women who are severely disabled2 had an employment rate of just 43 per cent. Between 2005 and 2013, their employment increased by more than six percentage points.

Employment rate of persons with and without disability

What Does the Government Do?

The federal government aims to integrate more people with disabilities into the regular labour market. The Federal Participation Act (Bundesteilhabegesetz) supplements the existing programme in this respect. The Integration through Qualification Network (Netzwerk Integration durch Qualifizierung) has been helping people with a migration background to integrate into the labour market since 2005.

Types of employment

In the national dialogue, people believed that the labour market should provide adequate numbers of secure jobs. Most of them would find it a problem if they were permanently faced with insecure jobs. They criticised fixed-term employment contracts as well as temp and subcontracted labour.

I’m part of the younger generation (21) and I’m terribly worried about the future. All you hear about now […] are temporary jobs offering no opportunity for a secure position at a company.
from an online response submitted on 21 September 2015
Non-standard employment as a share of dependent employment

Of the 33 million dependent employees aged 20-64, the proportion of people in non-standard employment in 2016 was 22.9 per cent. This has gone down since it peaked in 2007 at 25.5 per cent. Non-standard employment is partly a matter of choice, partly accepted as a way of entering the labour market, and partly involuntary.

In 2016, around 7.6 million people in Germany worked in non-standard forms of employment. They were working on fixed-term contracts, in marginal or part-time employment for less than 20 hours a week or in temp employment. Of the people in non-standard forms of employment, 4.8 million were working part-time, 2.6 million were on fixed-term contracts and 2.1 million were in marginal employment. In comparison, relatively few people were in temp or subcontracted labour contracts (732,000 people). This represents 2.2 per cent of all employees.3

Different forms of non-standard employment as a share of dependent employment

Non-standard and standard employment have both gone up in Germany since 2000. The number of people in non-standard employment increased from 5.9 to 7.9 million between 2000 and 2016. The peak of around 7.9 million was reached in 2010 and has dropped slightly since then. The number of people in standard employment increased from 23.7 to 25.6 million between 2000 and 2016. There is no evidence of an increase in non-standard employment solely at the expense of standard employment contracts.

Number of persons in non-standard and standard employment

Non-standard types of employment are much more widespread among women than among men. This is not due to fixed-term employment contracts, but marginal and part-time work. However, men are more often in subcontracted or temp employment.

Number of persons in different forms of non-standard employment by gender 2016

Many women in part-time and marginal employment want to work more hours, though not necessarily full-time. Close to full-time work and in particular more flexibility with regard to working hours and location in order to gain a better balance between work and family obligations. Spending too much time working in part-time jobs and marginal employment has a long-term impact on income earning opportunities and increases the risk of poverty among women. This holds particularly true for divorced and older women.

What Does the Government Do?

The federal government has introduced a new law that returns personnel leasing to its core functions and prevents the abuse of subcontracted and temp work. The law for strengthening professional further education and training and unemployment insurance protection (Gesetz zur Stärkung der beruflichen Weiterbildung und des Versicherungsschutzes in der Arbeitslosenversicherung) has been passed with a view to offering further education opportunities to low-skilled workers and the long-term unemployed.

Well-paid work

The level of wages and salaries were frequently mentioned during the national dialogue. It is necessary for wages and salaries to be fair and high enough to allow people to lead a reasonably comfortable life. The majority of people supported the minimum wage. A few people would like the introduction of an unconditional basic income.

A postman has to be able to feed his family without needing government support.
from the national dialogue event of the Arbeiterwohlfahrt in Berlin on 17 June 2015

The indicator real net wages and salaries provides information on changes over time in the annual real net wages and salaries (i.e. adjusted for inflation) of individuals in a dependent employment relationship. In this sense, it can be viewed as an indicator of the purchasing power of an average worker.

Net wages and salaries per employee (adjusted for price changes, in euros)

Between 1991 and 2016 real, price-adjusted net wages and salaries per employee fluctuated between 19,811 and 20,637 euros. Average wage increases have lagged behind economic growth over the last 25 years. But the situation has been much more positive since 2009. After a temporary fall in real net wages and salaries, they are now once again increasing.

Coverage of employees by collective agreements

There are many reasons for the modest increase in net wages and salaries. These include the low wages paid in East German federal states after reunification, changes to the structure of employee due to increasing numbers of women in the workplace, particularly in non-standard employment, and also stagnating real wages as a result of weak collective pay agreements.

Action must also be taken to close the pay gap between men and women. With regard to the average gross hourly earnings, in 2016 this stood at 21 per cent in Germany as a whole, seven per cent in East and 23 per cent in West Germany. This gap narrowed very little between 2006 and 2016. A large part of the difference is due to the fact that women take more frequent and longer career breaks due to family commitments, are more seldom in top management positions and more often work part-time, which often results in lower pay.

Outdated notions concerning gender roles could also be a factor here as well as indirect discrimination and fewer career opportunities. Direct discrimination is also a problem. Indeed, a comparison of men and women with equal qualifications in similar professions and positions reveals a pay gap of approximately six per cent.4

What Does the Government Do?

The German Federal Government is now protecting employees against inadequate wages with the introduction of the legally mandated minimum wage of 8.50 euros in early 2015. In order to reduce the effects of "bracket creep", the federal government has increased tax allowances for adults and children. In 2016, it furthermore passed a tax rate adjustment.

The German Federal Government wishes to use legislation to achieve greater compliance with the principle of “equal pay for equal work”. In future employees will be able to ask for individual information about gender-specific wage differences in companies.

Working conditions and meaningful work

The national dialogue revealed that people do not merely view work as a means to an end. The participants wanted to have a good working environment and conditions, such as flexible working hours and more mobile work options. Are people in Germany satisfied with their jobs?

It’s important to me to do something meaningful. This can be an occupation, a job that I enjoy doing, but one that also challenges me and helps me grow […].
from an online response submitted on 5 October 2015

The majority of employed people in Germany are satisfied with their jobs. This high level of satisfaction has remained constant for around 25 years.

Job satisfaction by income group

Socio-demographic factors have no great impact on job satisfaction. There are no particular differences between men and women or between people with and without migration background. Age also has little impact on people's job satisfaction. Only employees between the ages of 45 and 54 experience somewhat lower job satisfaction than younger workers.

However, there are significant differences when it comes to income level. Not surprisingly, job satisfaction among people in the higher income bands (the 10 per cent with the highest income) was greater than that of people at the bottom (the 10 per cent with the lowest income). The differences were particularly striking in 2004, but the gap has been closing steadily since then. In 2014, job satisfaction of those at the top of the income distribution is 7.4 compared to 6.9 of those at the bottom. This convergence is mainly due to improved satisfaction among lower earners.

What Does the Government Do?

Politicians have no direct influence on many factors that play a large part in job satisfaction. The government establishes and manages the framework for good and healthy work conditions. Nevertheless, shaping the work climate and environment is primarily the responsibility of the collective bargaining parties. Therefore, the freedom to reach binding collective agreements and the principle of co-determination are so important.

Footnotes

  1. 1

    The Federal Employment Agency's numbers on youth unemployment deviate from those of the OECD. For international comparisons, the OECD draws on numbers from the European Statistics. They define unemployment in line with the concepts of the International Labour Association. According to this concept a person is unemployed, if he or she is actively seeking for work and is available for the labour market. This concept also includes people who are not officially registered as unemployment.

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  2. 2

    Disability is considered to be severe when the degree of disability is 50 per cent or more.

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  3. 3

    The sum of employees with fixed-term contracts, in marginal or part-time employment who work less than 20 hours a week or in temp employment deviates from the total number of people employed in non-standard employment, because employees can be counted twice, if for example they work in part-time and have a fixed-term contract.

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  4. 4

    The Federal Statistical Office publishes the adjusted gender pay gap (bereinigte Entgeltlücke) every four years. The number refers to the year 2014.

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