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German Unemployment Obfuscation

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com

One of the hardest things to get in this world is a truthful, or at least a somewhat realistic, or at the very least a not totally fabricated unemployment number, but every country has its own bureaucratic madness in pursuing obfuscation. And Germany is no exception. Official unemployment—3,081,706 unemployed and an unemployment rate of 7.3%—dropped to a two-decade low in January, but a recreational dive into the Federal Labor Agency’s monthly report (Monatsbericht) reveals another story.

The numbers were touted by politicians in the governing coalition, from Chancellor Angela Merkel on down, amid media hyperventilation about Germany's superior economic model, though dark clouds have already appeared. Read.... “German Success Recipe” or Blip?

Even French President Nicolas Sarkozy, who is struggling to hang on to his job for another five years, is obsessed with Germany’s mysterious success in bringing down its unemployment rate and can’t help but mentioning it every time he speaks about fixing the French economy. But the Federal Labor Agency’s monthly report reveals many pages into it—surprise, surprise—that the headline numbers issued with unrounded Teutonic precision have only a tenuous relationship with reality.

Turns out, certain groups of unemployed people are systematically excluded from the official unemployment numbers, though they’re listed in the monthly report and are known—unlike the inscrutable statistical adjustments meted out in the bowels of the US Bureau of Labor Statistics. On second thought, statistical adjustments must also be taking place in Germany because the numbers still don’t add up. These are the excluded groups:

- Participants in “select measures of active labor market policies,” such as obtaining qualifications and professional training: 1,075,004.

- Participants in “activation” and “job integration” programs: 127,742

- Those in “preretirement-like ruling (special status)”: 106,973

- Participants in government-paid job training: 154,648

- People who are called in inimitable German, "1-Euro-Jobbers." They perform tasks that are deigned communally useful, such as clearing snow from city streets in Leipzig: 133,298.

- Participants in language courses, integration courses, and other programs that are funded by agencies other than the Federal Labor Agency: 72,513

- Participants in citizens jobs programs: 21,823

- People who are difficult to find jobs for: 9,533

- Unemployed who are temporarily sick: 68,202

In total: 1,701,534.

Added to the headline number of the officially unemployed (3,081,706), we get a total of 4,783,240. And it does not include the underemployed who are stuck in part-time jobs but are looking for full-time jobs.

Alas, in January, 5,394,064 people actually received unemployment compensation. So clearly, I must have missed a few categories.

But it gets even worse: People 58 and older are excluded from the official unemployment numbers, even if they're desperately looking for a job. They don’t receive unemployment compensation but, conveniently, pre-retirement compensation. So they don't count for the simple reason that they're too old to count. That’s the German baby-boom generation. They're turning 58 in massive numbers and fall unceremoniously off the unemployment lists. In September 2011, the last month for which official numbers were available: 374,592.

Add them to the 5,394,064 official recipients of unemployment compensation to obtain 5,768,656.

And what about those who aren’t eligible for unemployment compensation? While they receive “social aid” and other forms of support, they don’t count as unemployed.

So, like in the US, the actual number of unemployed people and the actual unemployment rate remain a mystery, despite the confidence-inducing but false sense of accuracy that these grotesquely unrounded numbers provide. And in the end, unemployment in Germany is probably close to double the official headline number.

But in the US, unlike in Germany, a hullabaloo broke out after the BLS reported that a surprisingly robust 243,000 jobs were created in January, and that the unemployment rate had dropped to 8.3%. Cynics, academics, BLS heretics, BLS true believers, hype mongers, and politicians waged a media battle over these numbers that President Obama serenely trotted out as validation of his policies. Even Rush Limbaugh jumped into the fray. But now, for February, a whole new debacle is brewing. Read.... Suddenly, a Sharp Deterioration in the Job Market.

 

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Tue, 02/28/2012 - 12:21 | 2204167 Juancito
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The question is how this 1.7m number has evolved over the past several months -- if it's been growing that's not good.

Tue, 02/28/2012 - 11:50 | 2203990 NEOSERF
NEOSERF's picture

One really does get the feeling that between fudging the numbers, spending trillions to pacify the masses and pushing reality tv, smartphones and Xbox to keep the 18-27 year old males off the streets that this whole charade is in the final innings.  Don't see how this goes on worldwide for another 3 years.  Smells like a Depression coming so you see why they are so worried about Greece; nobody really knows what the first domino will be although I tend to think it was Lehman and the time since has simply been a long quantitative valium fix which isn't working anymore

Tue, 02/28/2012 - 10:12 | 2203518 rsnoble
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And Germany is supposed to be the flagship of the EU? They sound as fucked up as the US!

Tue, 02/28/2012 - 09:22 | 2203294 Rynak
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A little correction:

And what about those who aren’t eligible for unemployment compensation? While they receive “social aid” and other forms of support, they don’t count as unemployed.

That "social aid" no longer exists since the reforms were put in place. In principle, there now only exists two-tier unemployment benefits, and various programs to keep people busy and out of the stats. If you do not qualify for benefits, you're put homeless on the street. And among many requirements are: 1. quasi-surveilance that sounds out of some totalitarian regime (want to visit your girlfriend for 3 days over an extended weekend? Please report to the state, or you lose benefits), and 2. Taking ANY job regardless of employment conditions and length of occupation (in other words, free job market outlawed - one side makes the conditions, the other must accept).

Here's a quick summary of why german unemployment numbers are the way they are:

1. underemployment, pre-retirement and various "keep people busy"-programs, do not count as unemployment

2. massive sponsoring, tax-reductions and forced wagedumping to attract multinational megacorps from PIIGS into germany

So, it is a mix of stat-manipulation, employment below sustainable price (difference sponsored by the state via benefits), and attraction of large multinational exporters out of other nations.

Or even shorter: germany's population is sold below production costs. Germany pays large corps to produce, not the other way around.

Tue, 02/28/2012 - 10:21 | 2203578 trilliontroll
trilliontroll's picture
The myth of the model of Germany

translate.google.com/translate?hl=en&sl=de&u=http://www.heise.de/tp/artikel/36/36395/1.html

"...

The number of unemployed has decreased so only because the available work was spread across more shoulders, while accepting the fact that many "workers" are no longer able to live from their work.

...

That said, there are over two million workers less in manufacturing than in 1995, while only the purely internal German service sector has expanded (this concerns mainly the area of ??technical and business support service, so as IT consultant for businesses, as well as health care, such as nursing ).

"

 

--------------

The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic.
John F. Kennedy

Tue, 02/28/2012 - 09:08 | 2203284 MFL8240
MFL8240's picture

 This article is for real?  have you looked at the clown show out of DC yet? 8.3% unemployed by ignoring 1.2 million people.  What the hell is going on where noone tells the truth?

Tue, 02/28/2012 - 14:40 | 2204772 Boxed Merlot
Boxed Merlot's picture

What the hell is going on where no one tells the truth?...

 

Do you always answer your own questions?

Tue, 02/28/2012 - 07:56 | 2203160 j0nx
j0nx's picture

The German people are muschis just like their American counterparts. We all deserve exactly what we are getting. And then some.

Tue, 02/28/2012 - 07:53 | 2203156 mantrid
mantrid's picture

in previous global German company I worked for, one that was actively moving its facilities to China and CE Europe, I had an opportunity to observe how this 'german economic miracle' works. Baby boomers are moved into dedicated placeholder-company which pays them 3/4 of already inflated salary for staying home or doing whatever they like for a year (as long as it doesn't conflict with company interests, like competition). upper management can't fire those people because of unions. they can't keep them any longer. company struggles for state aid. middle managment is so resistive that when faced executive orders to cut spending they choosed to close outposts in.. China.

german companies officialy hardly turn to 'job-supporting state aid programmes' officialy because it looks bad in reports and there's plenty of 'innovation-supporting UE donations' that basically achieve the same. when you're awarded an innovation donation it looks as if you're growing rather than keeping zombie eomplyees busy.

Tue, 02/28/2012 - 07:32 | 2203143 sickray
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the french aren't lazy?

Tue, 02/28/2012 - 05:58 | 2203086 rikoder
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"French President Nicolas Sarkozy ... is obsessed with Germany’s mysterious success in bringing down its unemployment rate "

 

No mysteries nor solutions...1/4 of all german workers have a salary below 400E/month (most of those are part time), there is the mirage.

In France, the RSA (Revenue de Solidarite Active) is the lowest social aid which amounts for ... 390E/month. Anyone who has worked a year or 2 and is above 25 years old can claim for that aid and then stay home.

This aid can last for ages. 

Now, do you think the french would move their asses and find a job paid 1000E/month or just stay home and chill, tough choice (or not).

You might then think: Cut those aids and make the bastards work.

But if those aids are cut, you will see nationwide  riots like the ones we saw in UK recently. The irony is that the UK riots were a consequence of lowering the lowest social aid few months before (inflation rising at the same time).

Conclusion: The germans will get out of their bed to get 400E/month, the french won't do it for 1000E/month because they already got for free almost the same amount with the RSA. It's a cultural problem root as well as a system one too. The system wants them lazy so that the state can lend more money to the ECB and make the employers happier by lowering their salaries. Banks and employers are happy so Sarko is happy.

ps: don't get me wrong, the french are not lazy (nor are the greeks for that matter) but the system want (and show) them lazy for one goal: put the middle class down by opening the doors of immigration and abuse the system so that they can go to the ECB.

Tue, 02/28/2012 - 08:56 | 2203247 Rynak
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You mean, there is such low workhour demand, because there isn't enough workhour supply? It is a supply problem, not a shortage of demand?

Yeah, you totally do not claim that unemployment is as high, because people are too lazy.... except of when you do.

GFY slavedriver bitch. You're part of the problem, not part of the solution.

Tue, 02/28/2012 - 12:51 | 2204312 AnAnonymous
AnAnonymous's picture

Ah, going for the jugular.

One has to remember that in US citizen economics, one does not hire people to match a certain work load/level of activity, one hires people because they are cheap.

It is the only answer possible one you factor in that US citizens claimed they would overcome the environment.

Work capacity is no longer limited by the activity an environment can sustain.

It is limited by cheap or not cheap workforce.

You start a project? Dont bother budgeting it, weighting productivity against the work load. Hire, hire, hire if the workforce is cheap enough.

Overcapacity cant exist. The environment has no boundaries.

Tue, 02/28/2012 - 04:55 | 2203047 EcoFlow
EcoFlow's picture

There are still people thinking unemployment rate can be used for international comparison ??

 

Tue, 02/28/2012 - 03:18 | 2202952 ebworthen
ebworthen's picture

Those Germans must have had a conference with the best and brightest from the B.L.S. and caught the "statisticians flu" running rampant here in the U.S. that causes 20% unemployment to appear as 8.5%.

Funny thing is they take no sick days and get paid more than ever.

Tue, 02/28/2012 - 08:59 | 2203257 Rynak
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Those "best of the BLS" must have been bankers and representatives of megacorps.... because it was specifically a team of those, who designed those reforms :-)

Tue, 02/28/2012 - 03:14 | 2202951 AnAnonymous
AnAnonymous's picture

Unemployment is a rich topic because it exposes so much US citizens and their eternal US citizen nature.

Here's an example:

Some US citizen nations consider that for certain sectors, people are fully employed when the work 8 hours

a-per week
b-per month
c-per year

And no, the sectors do not include people making 5ks per hour, far from that.

When one knows the criterion chosen by US citizens, the deduction is obvious: US citizens are not interested in getting an accurate view on unemployment. Only keeping the face, pretending, being duplicitous.

Tue, 02/28/2012 - 03:19 | 2202957 ebworthen
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Please kindly separate U.S. lying politicians, propagandists, B.L.S. lairs ("out"liers - ha, ha), and the sheeple from the many here and elsewhere in the U.S. who know they are being lied and are very pissed off about it.  Thank You!

Tue, 02/28/2012 - 13:09 | 2204395 AnAnonymous
AnAnonymous's picture

Please kindly separate U.S. lying politicians, propagandists...

_________________________________________

US citizens are proponents of US citizenism ('Americanism'), that doctrine started on 1776,July, 4th.

US citizens are to be found everywhere around the world.

US citizens do not forcefully hold US citizenship. Even though the mecca of US citizenism is the US of A.

My comments usually do not address people who hold US citizenship but people who share that state of mind popularly and unproperly known as 'Americanism'.

The distinction is de facto made because that kind of train of thought, that wishful substition of reality is trademark of 'Americans'

Another point is that when reading your list, how much of the current population of the US of A is encompassed? 70pc? 80pc?

Tue, 02/28/2012 - 09:36 | 2203353 Sophist Economicus
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Its not a person, it's some chinese bot that is trying to say something - but God know what the heck it is....

Tue, 02/28/2012 - 14:55 | 2204866 Boxed Merlot
Boxed Merlot's picture

Its not a person, it's some chinese bot that is trying to say something - but God know what the heck it is....

 

I'll take a stab at it. 

As an internal observer and person born, raised and living in the USA, "citizenship" began just before Christmas in 1913 when people in the US became "taxpayers".  Prior to this time, taxes were paid to the government by private sector commercial entities engaged in income generating ventures and utilizing government issued currency.

 

Since then, citizenship / taxpayer has become the operative word used as a synonym for a person living within the jurisdiction of the United States of America by using private sector issued federal reserve barter papers for fun and profit.

 

This particular entity is evidently expressing an aversion to being so classified. 

Tue, 02/28/2012 - 12:59 | 2204350 AnAnonymous
AnAnonymous's picture

Ah, building an exterior...

US citizenism cant be discussed from within. US citizens are usually forced to refer to an exterior.

The best thing is that US citizenism is supposedly universal.

The fun: what is going to happen when US citizenism has spread all around the world?

What is going to happen when US citizens will no longer be able to refer an exterior to explain any internal lack?

The answer: true proponents of true US citizenism vs proponents of false US citizenism.

US citizens, a world of quasi certainty. The monotous one track trip.

Tue, 02/28/2012 - 02:52 | 2202935 Peter Pan
Peter Pan's picture

The unemployment figures everywhere are a farce. Why not include the people in jail, the armed forces that serve overseas, politicians and the like?

Tue, 02/28/2012 - 01:52 | 2202851 jhm
jhm's picture

And all that is now ... what? News? The numbers are cooked since years. Everyone knows it.

I would average the numbers at around 8-10 million people (if not even more) having to cope with unemployment, mini-employment, low-employment, part-time-employment and whatnot plus it's effects and aspects for their lives.

Unemployment and the social system is the number one subject in every second talkshow here since 10 years at least. It literally spills out of everone's ears meanwhile. It is only topped by the amount of talks and reports on the "Unterschicht", the poor "underclass" which has developed at an alarming rate since the socialists and the greens have massively axed the former social system and sold the country to the banks and the private investors after 1998.

But, no offense meant. Thanks for the info and the work.

Tue, 02/28/2012 - 03:09 | 2202944 AnAnonymous
AnAnonymous's picture

The news: US citizens keep doing it even when they are exposed. Will remain news until they drop the habit.

Tue, 02/28/2012 - 01:25 | 2202789 adr
adr's picture

Why is it just so hard to take the total number of citizens, subtract those under 18 and over 65, and then subtract out the number of available jobs. The unemployment rate would be the population between the age of 18 and 65 minus the number of available jobs. Yes if you are in college and do not have a part time job to pay for expenses you are unemployed. In fact if you work a part time job or do not make enough money to exist on your own, you are functionaly unemployed.

Yes, I know there are quite a few kids under 18 and seniors over 65 with jobs. But not counting them would probably skew the number less than current "seasonal adjustments".

My guess is that counting full time jobs with income above $25k as employed would result in an unemployment number north of 70%. I don't think it would be a losing bet if you made the claim that less than 30% of the jobs in the USA pay more than $25k a year. A $10 an hour 40 hour a week job pays just a bit over $20k. For a great number of people a $10 an hour job is optomistic.

I'd like to think otherwise but the median salary is skewed towards $38k only because of the absolute obsceness of the wages of the top 10%. If you really take a hard look at the true employment picture in America, we're totally screwed. Without trillions in government payments to prop up the economy, everything fails.

Tue, 02/28/2012 - 00:54 | 2202746 AbruptlyKawaii
AbruptlyKawaii's picture

Would love to see zandi explain 243k to a sub 150k number this month

Tue, 02/28/2012 - 00:40 | 2202719 non_anon
non_anon's picture

war will bring back 110% employment

Tue, 02/28/2012 - 09:14 | 2203290 trilliontroll
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and life after it will not be as boring as today

(and obesity will be rare)

http://www.youtube.com/watch?v=rZrXQy2tJDw&feature=related

 

Tue, 02/28/2012 - 01:08 | 2202763 pvzh
pvzh's picture

"Creating employment is straightforward crap when the nation is at war and there is a draft. If every worker were stamped in the army and fleet, we would have full employment and nothing to eat." F. Hayek (http://www.youtube.com/watch?v=GTQnarzmTOc)

Tue, 02/28/2012 - 02:27 | 2202902 non_anon
non_anon's picture

I love the late Hayek (no homo)

http://www.youtube.com/watch?v=3r4vFnPCCjU

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