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Economy in Brief

German Employment Falls in Q4; Gain in Public Sector, but Private Sector Jobs Base Has Marked Erosion
by Carol Stone February 16, 2006

Germany's Federal Statistics Office reported Q4 employment data today, classified by industry. These data are an input to German GDP data, due for release next Wednesday, February 22.

Early last week (February 7), Louise Curley discussed here weakness in German industrial production for Q4 and sluggish wage performance for workers, already bringing a strike by one major union. Today's employment data give further evidence of weakening in the German economy. Total employment fell 5,000 in Q4 from Q3 and was off 0.3% from a year ago. Subtracting out government, education and other public service activities, we see that the private sector is even weaker. Jobs there decreased by 88,000 over the second half of 2005 and were off 1.0% from the year-ago period. They fell 0.8% for the year as a whole, while total employment was off 0.2% in 2005.

Jobs in industry declined 135,000 from Q4 2004 to Q4 2005 and the trade and transportation sector was down 102,000. Agriculture and construction employment also declined. Growth in finance and other business services, by contrast, showed a 76,000 increase across the year. Government and related jobs had a substantial 152,000 increase from Q4 2004. The sharp rise in public sector jobs clearly offset a good portion of the total 280,000 job loss in the private sector. At the same time, it increases the burden on private sector firms and workers to generate tax revenues with which to pay the public sector workers. So the support to the economy from added government workers comes with a cost to businesses, which are already weighed down with pressure from labor unions wanting greater compensation, as explained by Ms. Curley here last week.

Germany (SA*, Thousands) Q4 2005 Q3 2005 Q4 2004 2005 2004 2003
Total Domestic Employment** 38,779 38,784 38,907 38,779 38,869 38,719
   Change -5 +29 -0.3% -0.2% +0.4% -1.0%
Industry 7,844 7,864 7,979 7,882 8,018 8,138
Trade*** 9,709 9,735 9,811 9,737 9,791 9,716
Finance & Business Services 6,443 6,423 6,369 6,411 6,309 6,128
Government/Education/Health/Etc 11,826 11,779 11,676 11,753 11,628 11,535
   Change +47 +65 +1.3% +1.1% +0.8% +0.3%
Total - Government/Etc 26,953 27,005 27,231 27,026 27,241 27,184
   Change -52 -36 -1.0% -0.8% +0.2% -1.5%
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