· The unemployment rate in Germany rose to 10.8% in November,
the highest in almost six years, since December 1998. The number of people
unemployed rose 7,000 in the month, an increase of 2.2% from November a year ago.
At the same time, Germany is in the anomalous position that both
unemployment and employment are rising. While the number employed dipped
1,000 in September (latest available, also published today), this was the sixth
month in which that figure was higher than a year ago, marking a turn from 29
consecutive months of year-on-year declines. At 0.3%, the current gain is
obviously not large, but clearly the stabilization is welcome.
· In Spain, the labor market is much more vigorous. The unemployment rate there, 10.5% in the third quarter, is nearly as high as in Germany, but it has come down markedly, and the number unemployed for November (which was reported today) is 1.0% lower than the year-earlier level. Jobs are growing, with third quarter employment up 2.5% from a year ago.
· It is widely argued that German regulations keep labor costs
so high that companies are encouraged to move operations elsewhere. This
may be the case, but it's not evident in German labor cost data. Over the
last year, hourly compensation per worker in Germany has been virtually flat and
labor cost per unit of GDP has actually declined 1.3%. In contrast, these
costs are rising in Spain. Thus, labor mobility -- perhaps described
better as business operations mobility -- in Europe may be pushing labor costs
toward convergence as conditions ease in the high-cost country but firm in the
low-cost region.