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German labor market remains stable despite lockdown

January 5, 2021

Nonessential firms have been ordered to close as part of Germany's coronavirus lockdown measures. It means employers have tapped a state scheme to slash working hours and avoid layoffs.

A trainee at BMW's plant in Leipzig
Germany's labour market remained stable despite the pressures of a nationwide COVID shutdownImage: Getty Images/J.-U. Koch

Germany's labor market remained stable in December, according to official data released on Tuesday.

The figures were published ahead of a decision by the country's federal and state leaders to extend a nationwide lockdown to January 31. 

The government ordered most nonessential businesses to close over the Christmas period, prompting employers to tap a state scheme that allows them to slash working hours and avoid layoffs.

The seasonally adjusted jobless rate in Europe's top economy stood at 6.1% in December, the same as in November, after falling for the three previous consecutive months, according to the BA federal labor agency.

Unemployment fell by 37,000 people, seasonally adjusted, to 2.7 million, although the figure is still nearly half a million higher than in December 2019.

Germany tightened virus restrictions last month, after already shuttering culture and leisure facilities in November.

BA data said another 660,000 people were placed on short-time employment between December 1 and 28.

The pandemic and spiraling unemployment

Lockdown extension

German Chancellor Angela Merkel and state leaders agreed on Tuesday to keep the lockdown in place until at least the end of January as infection rates remain stubbornly high in the country. They also announced stricter rules to curb the spread of the virus.

Germany on Tuesday reported 11,897 new COVID-19 cases and 944 deaths.

"The rising number of short-time workers, as well as the longer-term impact from the ongoing second lockdown and a high risk of insolvencies in 2021, clearly argue against too much optimism," said ING bank analyst Carsten Brzeski.

BA chairman Detlef Scheele said the pandemic was having a "very visible" impact on Germany's labor market.

"The stabilizing effect of short-time work has, however, secured employment and prevented higher unemployment," he added.

Before the coronavirus pandemic, Germany's unemployment rate had hovered at a record low of around 5%.

Demand for labor rising again in Germany

nm,jf/shs (AFP, dpa, Reuters)