Will the resilience of the German labour market be long-lasting?

- "The German labour market’s resilience to the crisis has been exemplary, as the unemployment rate is at its lowest level since 1993 and continues to decline."
- "This performance shows the combined impact of several factors. Thus, out of the current three percentage point gap between the German unemployment rate (7.0%) and that of the euro zone (10.0%):
• 0.3 percentage point is explained by changes in the labour force in Germany, where demographic effects have had an favourable impact since the rise in the participation rate - which was spurred on by the Hartz reforms - ended;
• 1.2 percentage point is explained by the employment policy (0.3 percentage point by the reinforcement of support measures for job seekers and 0.9 by the easing of the terms for short-time work);
• apart from the success of short-time work, the German stimulus package has had a limited impact on employment (5,000 jobs created in construction);
• 0.8 percentage point is explained by the lack of destruction of jobs in construction, since there has not been any real estate bubble recently in Germany."
- "All in all, the "implicit" outperformance of German employment is "only" 0.7 percentage point of unemployment, in particular thanks to the jobs created in non-market services."
- "Demographic effects and the lack of a real estate bubble have made this performance long-lasting. However, it will subside as the employment policy runs out of steam, i.e. by around one percentage point over the next two years."

Natixis Flash Economics 397 20100811

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