Swiss Institute Takes Dim View of German Job Prospects

21 June 2002

The Germany Report 2002-2020 – published every four years by Basle-based research institute Prognos – takes a gloomy view of the nation’s employment prospects over the next eight years.

The report, released in part on Wednesday, attempts to predict the development of Germany’s most important social and economic trends up to 2020. In one of its key forecasts, Prognos says the number of jobless citizens will not fall below an annual average of 3.5 million until 2010 – a figure not significantly less than 2001’s nadir of 3.85m.

Prognos attributes this grim statistic to the increasing tendency of women and older people to remain in employment, causing the number of available workers to increase by 700,000 to the year 2010.

This demographic change will be reflected in the labor market only later. The number of people aged below 50 able to work will fall by more than 5.5 million. At the same time, the number of older persons will increase by almost half or just under 5 million.

The root causes of the continuously high level of unemployment are “without doubt of a structural nature,” Prognos opines. This probably means that under-employment in Germany is only marginally influenced by economic fluctuations.

The structural change towards a more services-oriented economy will continue with the real economic activity of the services sector increasing by almost 50% over the next twelve months. Despite this trend, Germany is far from becoming a de-industrialized nation. Gross value-added product (excluding construction) will increase by 30% over the same period, the report said.

But not all economists attach credence to the report, especially given its long-term nature. Henning Klodt, a researcher at one of Germany's leading research institutes, the Kiel Institute for Economics, says that the flaw in this – and all other long-term forecasts – is that they are based on past events and cannot take into account (as yet) unknown future trends.

Germany is Europe’s largest economy.

Data sourced from: Frankfurter Allgemeine Zeitung; additional content by WARC staff