Strong German Job Growth Continues
It is increasingly evident that most economists -including me- underestimated just how big the positive effects of the German free markets reforms would be. During the latest year, employment growth has been 1.6%. Now, that may not sound particularly impressive, but considering the fact that this happens in a country with a shrinking working age population, it is actually really impressive.
The employment to population ratio rose 1.6%:points, from 67.7% to 69.3%, meaning that employment rose in effect 2.4% relative to the working age population. This is the equivalent of a 3.4% employment growth in America (or a monthly employment gain of 400,000). As a result, unemployment is falling dramatically, from 8.8% the year before to 7.2% now.
This however, implies that the current relative strong economic growth rate is unsustainable. Not only because it is partly (although probably to a lesser extent than in other euro zone countries) fueled by unsustainably low ECB interest rates, but also because the shrinking work force means that labor shortages will soon appear.
The employment to population ratio rose 1.6%:points, from 67.7% to 69.3%, meaning that employment rose in effect 2.4% relative to the working age population. This is the equivalent of a 3.4% employment growth in America (or a monthly employment gain of 400,000). As a result, unemployment is falling dramatically, from 8.8% the year before to 7.2% now.
This however, implies that the current relative strong economic growth rate is unsustainable. Not only because it is partly (although probably to a lesser extent than in other euro zone countries) fueled by unsustainably low ECB interest rates, but also because the shrinking work force means that labor shortages will soon appear.
posted by stefankarlsson at 9:59 PM
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