Germany Employment Maps

[Franknburger]

Unepmloyment in Germany has increased considderably from 6.7 % in December 2012 to 7.4 % in January 2013.



Officials claim such increase to be usual for January, and the size of increase is within the typical range of seasonal fluctuations. However, this is the  third time in a row that unemplyoment has gone up slightly in comparison to the previous year, and other indicators, such as a decrease in reported job offers, indicate that employment boom which started in early 2010 may have come to its end.



Development of the German labour market over the coming months may be decisive for the upcoming federal and state-level elections in Germany this year. Therefore, I have prepared a number of employment-related maps as background information for discussing federal and state-leval electoral trends, which shall be posted and discussed here.

I will add updated maps, whenever new information becomes available.

[Franknburger]

The Baseline (January 2010)

Let's start with a look at the employment situation in January 2010, before the last employment surge commenced.



Essentially, there was a reasonably good employment situation in Baden-Würtemberg and Bavaria (5.5% avg. unemployment each). Switzerland and Austria had similar unemployment rates at that time, so Southern Germany may be regarded as part of a larger Central European high employment zone. Northwards, this zone extends further into much of Hesse and Rhineland-Paltinate  (and, ultimately, Luxemburg), albeit with slightly increased unemployment levels (RP 6.4, Hesse 6.9).

A second higher-employment belt runs from the Baltic Sea coast aroud Kiel via the Hamburg and Bremen metros to northern North-Rhine Westphalia, extending westwards into the Netherlands, and north-eastwards towards Denmark and Southern Sweden.

A third notable higher-employment region is found around Wolfsburg (Volkswagen HQ and main factory) in Eastern Lower Saxony.

Most of former East Germany has serious unemployment problems, with unemployment reaching 15% or more in the North-East, and the north-eastern parts of Thuringia. Employment is a bit better in the periphery of Berlin, but even Berlin (14.5 %) and surrounding Brandenburg (12.7 %) have unemplyoment rates nearly as double as high as the average in the West. The Thuringian Basin (Eisenach-Erfurt-Jena) shows up with unemplyoment rates below 10%, as do some other counties close to Bavaria, Hesse or Hamburg.

Serious unemployment problems also prevail in much of the Ruhr area, as well as other major cities in North-Rhine Westfalia (Krefeld 12.2%, Wuppertal 12.0%, Mönchengladbach 11.8%, Bielefeld 11.2%, Cologne 10.8%).  Other cities in the west with strong unemployment include Bremerhaven (15.6%), Offenbach (12.2%)  Bremen (11.4%), Kaiserslautern (10.9%) and Saarbrücken (10.7%).

[Tender Branson]

Here is the latest map of registered unemployment rates by district from Jan. 2013:

[Franknburger]

A look at seasonality

When interpreting employment changes between January 2010 and now, it is important to keep seasonality effects in mind. Over the last three years, the unemployment rate has in average decreased by 0.9% from January to July. This average  is partly also capturing overall employment gains over the three years. Nevertheless, sesonal employment rate fluctuations in the order of 0.6 - 0.7% between summer and winter are typical for Germany as a whole.



As shown in the map above, hovewer, seasonal variations vary strongly from region to region:

• Summer tourism destinations, especially those along the shores of the North and Baltic Sea, can easilly display seasonal employment variation above 2%, even up to four percent and more.
• Ressource extraction (logging & construction material), and related processing and transport is also subject to seasonal fluctuation. This leads to seasonal employment variation in the range of 3% in the Bavarian Forest (in the south-east, along the border to the Czech Republic and Austria). Elevated employment seasonality (1-1.5%) is furthermore found in most of the mountaineous regions, including the Bavarian Alps, the mountain ranges along the Czech border, the Thuringian Forest, Harz, Weserbergland and Sauerland mountain ranges extending through much of Central Germany, and the Eifel and Hunsrück in Western Rhineland-Palatinate.
• Agriculture & agri-processing: As fieldcrop agriculture is strongly mechanised, and use of Eastern European labour for manual harvesting is quite common, most rural areas are only showing moderate seasonal employment variation. The most remarkable exception to this rule is the Mosel wine growing area (above 2% seasonal variation in Cochem county), and the sugar beet & sugar refining belt north of Hannover, which extends eastwards into northern Saxony Anhalt. Other regions with seasonal fluctuation in the range of 1% include the orchard area around the Lake of Constance, the hop-growing Hallertau north of Munich, cucumber (pickling) in the Spreewald (southern Brandenburg), and ornamental plant nurseries north-west of Hamburg.

.

Metropolitan areas, on the other hand, tend to display below-average seasonal employment fluctuation, unless they are undergoing major construction projects (e.g. Berlin airport, Wilhelmshaven seaport, Hamburg HafenCity).

The regional economic structure alone, however, is not sufficient to explain the extent and depth of employment seasonality across most of Eastern Germany. A key factor here is temporary or permanent out-migration in order to seize job opportunities elsewhere. More on this in the next post ...

[minionofmidas]

Thanks for the seasonal variation map, never seen one but thought of the need before!

[Franknburger]

Labour supply

A combination of specific demographic patterns has substantially increased labour supply since early 2010 (see the population pyramid below):

• The pre-unification "mini baby boom" generation, born between 1986 and 1991 (peak in 1990)  is finishing education and entering the labour market. [Germany is 'famous' for its lenghty education, with average job entry ages of 21.5 years for non-academics, and around 24-25 years for graduates (master level)}
• At the same time, the post-WW II birth dip (1945-1949) is leading to comparatively few people retiring (average reirement age in 2010 was 63.5 years)
• Last but not least, there is a sizeable "hidden reserve", primarily consisting of women in the West who had been staying at home to take care of their children. As the second "mini baby-boom" (1995-2000, peak in 1997) comes into age, many mothers are again becoming available for, and interested in the labour market.

For a number of methodological difficulties and data availability problems*), it is hardly possible to exactly determine labour supply. A workable proxy - which bears the advantages of being available timely and on county level - is summing up registered unemployment and private sector employment (excluding public officials, army etc.) into "employable population" (the best term I could think of). Using this proxy, labour supply increased by some 850.000 persons (2.7%) between January 2010 and June 2012, which is making the recent German employment surge even more impressive.

A map and detailed analysis on the regional pattern of this labour supply increase will follow in the next post.

*) Except for Switzerland and Luxemburg, there is, e.g., no statistical information on cross-border employment available. Recent newspaper reports on county-level results (which are collected monthly but not published by the German Employment Agency) indicate that around one-third of employees in Waldshut-Tiengen county in southern Baden-Würtemberg work in Switzerland. Conversely, a recent study suggests that in the Saarland, one out of seven employees is a French citizen.  Luxemburg may account for up to one third of all employment in the borderimg German counties, however, no sub-regional breakdown is available.

[Franknburger]

Labour mobility:

So, here comes the map on changes in regional "employable population";



At first sight, the picture is pretty clear: Substantial decrease (=out-migration) across most of Eastern Germany, except for parts of the Berlin metro, plus low dynamics in a few areas in the West  (most notably the periphheries of the Ruhr and the Saar "rust belts"), while the remainder of Germany is recording substantial increases in labour supply.

A second view, however, offers some surprises:

• Considering already high employment levels in early 2010, the extent of labour supply growth in the Munich metro, and the fact that labour supply has been increasing strongly across much of Southern Bavaria, is somehow unexpected.
• Aside from the usual supects (Hamburg metro, Hannover-Brunswick-Wolfsburg, Bonn-Cologne-Düsseldorf, Rhein.Main,  Rhine Neckar, Stuttgart-Heilbronn, Nuremberg metro), several new growth centers are emerging. These centers include the Lake Constance area and Freiburg in the South-West, and Münster-Osnabrück as well as Oldenburg / East Frisia in the North-West.
• In addition to the Berlin metro, most larger cities in the East, including Rostock, Magdeburg, Halle, and the Thuringian Basin (Eisenach-Erfurt-Weimar-Jena) display an increase in labour supply.  Leipzig and Dresden stand out in particular, with labour supply growth far above the German average.

To back up these observations, I have calculated absolute growth numbers for major metropolitatan areas (see table below - color intensity indicates grwoth rates). Bavaria accounts for more than one quarter of all labour supply growth (and the Munich metro makes up for more than half of it). The Bremen-Münster-East Frisia Triangle in the North-West comes in at a stunning third place, absorbing almost 10% of the total German growth.


[/list]

[Franknburger]

For reference, here a map of population changes between Dec 31, 2009 and Dec 31, 2011 (official data, most recent availability).



Essentially, it tells the same story as the previous map, just in a somewhat mor scattered form.

Top 5 population growth cities (by growth rate): Münster,  Darmstadt, Munich, Offenbach, Freiburg.
Leipzig and Dresden rank tenth and eleventh, respectively.

I was a bit surprised to see how far population decrease (= outmigration) reaches out  into the west, especially into the Ruhr and the Saar areas, and rhe Rhineland "textile belt" (Krefeld, Mönchengladbach). It is also worth noting that, except for Paderborn and Gütersloh counties, Eastern Westphalia is recording population losses, as is the eastern Bremen periphery. While the cities of Hannover, Brunswick and Wolfsburg are growing quite strongly, the industrialised areas in-between and around them (Peine, Salzgitter, Hildesheim, Wolfenbüttel) have been losing population. The same applies to parts of the Stuttgart metro. High petrol prices at work (except for high-income areas like Hamburg, Munich, Cologne-Bonn and Frankfurt).

[Vosem]

Auferstanden aus Ruinen
und der Zukunft zugewandt,
laßt uns Dir zum Guten dienen,
Deutschland, einig Vaterland.

[Tender Branson]

Not directly Germany, but still (you have to right-click to see the big picture):

[Franknburger]

Not directly Germany, but still (you have to right-click to see the big picture):

Great maps! They confirm the point of my second post, that much of Germany's labour market development cannot be seen in isolation. Rather, Germany is benefitting from its location at the conergenxe of two European high-employment zones, namely:

• The Alpine zone (Switzerland, Austria, Northern Italy, Czech Republic, Southern Germany
• The North Sea : Eastern UK, Netherlands, North-western Germany, Denmark, Norway (

As such, it is no coincidence that the German growth zones are gravitating towards the centers of these European zones (Freiburg, Lake Constance, Southern Bavaria in the South, Hamburg and Oldenburg / East Fisia in the North), while the convergence zone itself (Southern Lower Saxony, East Westphalia, Ruhr [,Belgium]) is increasingly lagging behind.

Then we have a number of capitals (Paris, Berlin, Waszaw, Bukarest) popping up as high-employment islands with some local impact, but so far unable to pull employment in their whole country and/ or to connect to the major growth zones.

There is some indication that another high-employment zone may be emerging along the middle and lower Danube, but, as the map is unfortunately not including nun-EU former Yugoslavia, a final statement requires further analysis. In future, it will be interesting to watch whether (i) the Lyon region manages to connect to the Alpine high-employment zone and (ii) the Baltic Sea region will be able to catch up with the North Sea.

Finally, there is the European periphery, suffering from crisis outside the EU (USA->Ireland, Mediterranean Arab->Portugal, Spain, Southern Italy, Greece;  Russia / Ukraine->Eastern EU). Here, I believe, the solutions need to come from outside the EU rather than from Brussels (while domestic reform may help in this respect).

[Velasco]

Fantastic maps, though the latter are quite depressing if you live in the periphery. As for your last point, Franknburger, I'm not sure about solutions coming from outside the EU for Spain, Portugal and Greece. I'd say that these countries are suffering more than others the lack of domestic reforms or political direction inside the European Union. Structural deficits apart, of course. Maybe I didn't understand completely well what you said in the last paragraph nevertheless.

[Franknburger]

Fantastic maps, though the latter are quite depressing if you live in the periphery. As for your last point, Franknburger, I'm not sure about solutions coming from outside the EU for Spain, Portugal and Greece. I'd say that these countries are suffering more than others the lack of domestic reforms or political direction inside the European Union. Structural deficits apart, of course. Maybe I didn't understand completely well what you said in the last paragraph nevertheless.

I probably was not making my point very clear, When I talked about "solutions from outside", I meant economic recovery outside the EU, which would move regions from the periphery into a more central position. In other words - one factor that is depressing Spain, Southern Italy and Greece is the low level of trade across the Mediterranean with countries such as Morocco, Tunisia and Egypt. Ireland has definitely been hit by the US recession. And Greece would be well advised to review their (historically understandable) anti-Turkish sentiments and realise what promising market is emerging next door. 

Domestic reforms - of course.  Greece and italy need to get their corruption problems under control, Greece's public sector is still much too large, as is the defence budget, Spain has dumped too much money into "white elephants", etc.

When there is demonstrated will to tackle domestic reform, I am quite sure that the EU and most member states (except for the UK, of course, they leave it to the remainder of the EU to solve Ireland's problems) will be prepared to assist. But, while such assistance may bring short-term relief, the long-term solution is fostering trans-Mediterranean (and trans-Atlantic) trade relations, which first of all means supporting political and economic stabilisation after  the Arab Spring.

[Zanas]

Comparing France and Germany, I'm not sure that female employment map reflects the real situation. Maybe a map reflecting worked hours would be more adequate, cause a huge number of German women work part-time jobs when they work at all, and I think French women have one of the highest employment rate, and especially full-time employment rate, of the world.

[Velasco]

Thanks, Franknburger. You're absolutely right about the gap between both shores of the Mediterranean Sea. It's a good point, indeed. From the little that I could have read till now, the whole thread seems very interesting.

[Franknburger]

Comparing France and Germany, I'm not sure that female employment map reflects the real situation. Maybe a map reflecting worked hours would be more adequate, cause a huge number of German women work part-time jobs when they work at all, and I think French women have one of the highest employment rate, and especially full-time employment rate, of the world.

As to a map on part-time employment - i would make one if I knew where to get the data (yes, I could probably download detailed labour market statistics for each of the 402 German counties, but I don't feel like it at the moment ..).

In general, you are right. First of all, female employment rates need to be seen in relation to overall employment and unemployment, respectively. As unemployment is higher in France than in Germany, this alone already implies a higher potential female labour market participation in France.

Nevertheless, female labour market participation has traditionally been quite high in the East (GDR traditions, including a well established network of early childhood day care institutions) - one of the reasons for higher unemployment rates there. With the labour market in the West booming, female employment is  now also catching up in the West. In 2010, the German average stood at 70%, with Brandenburg (74%) and the Saarland (65%) marking the state-level extremes.

46% of all women, however, are working part-time, which is the second-highest rate of all EU countries (only the Netherlands have a higher rate). This fact, and the lack of early childhood day care in many parts of the West, is a major political issue. France and Scandinavian countries are frequently cited as examples to follow.

In the Lower Saxony state elections exit polls, "family policy" (which essentially stands for early childhood day care) came out as the fourth most relevant issue. Only 31% of respondents rated black-yellow as most competent in this field. I am quite sure that this will become a prime issue in the Federal election campaigns.

[ObserverIE]

When there is demonstrated will to tackle domestic reform, I am quite sure that the EU and most member states (except for the UK, of course, they leave it to the remainder of the EU to solve Ireland's problems) will be prepared to assist.

I'm not really sure why the UK is being blamed for failing to help Ireland. In terms of assistance with the loan program, they're participating separately but in parallel with the EU. In terms of running an economic policy that depresses their own domestic demand and thereby reduces export potential, the current British government's policies aren't helping, but neither, frankly, are the current policies at EU level, which are heavily influenced by the current German government and its allies.

[Franknburger]

When there is demonstrated will to tackle domestic reform, I am quite sure that the EU and most member states (except for the UK, of course, they leave it to the remainder of the EU to solve Ireland's problems) will be prepared to assist.

I'm not really sure why the UK is being blamed for failing to help Ireland. In terms of assistance with the loan program, they're participating separately but in parallel with the EU. In terms of running an economic policy that depresses their own domestic demand and thereby reduces export potential, the current British government's policies aren't helping, but neither, frankly, are the current policies at EU level, which are heavily influenced by the current German government and its allies.

Sorry, that was a misinformation on my side. I wasn't aware of the Uk's bilateral support package for Ireland.

As to "policies that depress domestic demand", see my next posts, which will make clear that Germany's domestic demand is anything but depressed.

[minionofmidas]

(most notably the periphheries of the Ruhr and the Saar "rust belts")

That's not the Saar, really.

[Franknburger]

(most notably the periphheries of the Ruhr and the Saar "rust belts")

That's not the Saar, really.

Well, how would you then call Merzig, St. Wendel, Küsel, Kaiserslautern and Südwestpfalz counties ?

[ObserverIE]

When there is demonstrated will to tackle domestic reform, I am quite sure that the EU and most member states (except for the UK, of course, they leave it to the remainder of the EU to solve Ireland's problems) will be prepared to assist.

I'm not really sure why the UK is being blamed for failing to help Ireland. In terms of assistance with the loan program, they're participating separately but in parallel with the EU. In terms of running an economic policy that depresses their own domestic demand and thereby reduces export potential, the current British government's policies aren't helping, but neither, frankly, are the current policies at EU level, which are heavily influenced by the current German government and its allies.

Sorry, that was a misinformation on my side. I wasn't aware of the Uk's bilateral support package for Ireland.

To be fair, they tend to keep it low profile, refraining from the finger-wagging and preaching of which other of our friends seem so fond.

You must be logged in to read this quote.

Oh, I've no doubt that Germany is doing relatively well and will continue to do so.

[minionofmidas]

The Westpfalz? (Except for Merzig, obviously. )

[Franknburger]

Drivers of Employment:

Before getting to the regional pattern of employment growth in Germany, it makes sense to look at the economic sectors that have been driving employment, in order to link spatial with sector trends:



Of the 1.32 million new jobs that were created between March 31st, 2010 and March 31st, 2012, roughly one-third each relate to consumption (trade, hospitality, social services) and to manufacturing (including construction), while the remainder (business services,  transport, facility management, time work) cannot be clearly allocated to either of these two. As such, the employment boom has both been export-induced and carried by domestic demand.

Some notes on specific sectors:

• Business Services:The main growth engines, both in absolute figures and by growth rate, were (in this order) management consultancy, engineering consultancy, IT services,  technical / engineering R&D, "other unspecified business services", and call centers. "Classical" business services such as legal advice, chartered accountants, advertisement, and market research grew as well, but at much lower rates.
• Health and Care: Employment grew considerably across all sub-sectors, but was especially high as concerns day care and homes for the elderly (a look at the age pyramid a few posts up tells you why). By July 1st, 2011, the army draft - and with it mandatory social service - was abolished. This has lead to some additional 30,000 jobs in the sector beeing created in the second half of 2011 (out of a total of 200,000 new jobs overall).
• Trade and Repair:Strongest growth for online / mail-order shopping, but more than half of all new jobs were created in classical (shop-based) retail. Car retail & repair also grew considerably (28,000 new jobs).
• Time work: Unfortunately, statistical breakdowns on time work have been changed by mid-2011 in a way that does not allow direct comparison with previous reporting periods. It may, however, be estimated that around 70% of the increase related to manufacturing, 16% to transport, storage and facility management (mostly security and cleaning), 6% to health & care, 3% to construction and the remainder to various office jobs including business and financial services.
• Vehicle manufacturing: While other segments, notably airplane and railway manufacturing, have contributed, more than 90% of new jobs were created by the road vehicle industry. The diagram above tends to strongly understate the role of vehicle manufacturing for two reasons: First, various components are "hidden" in other sectors, such as 'Rubber / Plastics', 'Metal Products" and "Electrical Devices', and, secondly, a good part of the growth in time work can be attributed to car manufacturing.
• Machinery, Equipment and Devices: Some 40% of the job growth stems from machine-building. Other major contributors were medical apparatus & devices, electronic components, control instruments, and power generation and other electrical equipment. Job reductions occured in manufacturing of IT, telecommunication, and household equipment.

[ObserverIE]

Ireland has definitely been hit by the US recession.

Ireland, like Spain, has primarily been hit by the consequences of the collapse of a housing bubble on which too much of the economy and the public finances had become dependent. Exports have held up well in contrast.

http://www.cso.ie/en/media/csoie/releasespublications/documents/externaltrade/2012/trade_nov2012.pdf

[Franknburger]

Ireland has definitely been hit by the US recession.

Ireland, like Spain, has primarily been hit by the consequences of the collapse of a housing bubble on which too much of the economy and the public finances had become dependent. Exports have held up well in contrast.

http://www.cso.ie/en/media/csoie/releasespublications/documents/externaltrade/2012/trade_nov2012.pdf

That's good news ! Impressive growth in trans-atlantic exports, even though there is a bit too much dependency on pharmaceuticals exports for my taste.

I was, however, not only referring to exports, but also to foreign direct investment, which, as I have read somewhere, is not coming in anymore from the US as it used to be. But I may be erring again here