Labor Pains

Jobless in Germany

Agentur fuer Arbeit
The line at Germany's Labor Agency is getting smaller, the bureaucracy is not.
  • Why it matters

    Why it matters

    Germany’s economy is motoring along, but there are serious inefficiencies in the public bureaucracy.

  • Facts


    • Germany implemented a package of labor and welfare reforms over a decade ago widely regarded as getting Europe’s largest economy back on track.
    • Germany’s unemployment rate has fallen to a post-unification low, but there are still one million long-term unemployed in Germany. The long-term dole is referred to as Hartz IV.
    • The Labor Agency plans to cut 17,000 jobs by 2019 – not fast enough for many.
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Germany’s employment miracle of recent years is something to be marveled at, but the agency that has been responsible for it is still a mess.

Around the world, the labor and welfare reforms undertaken by Germany more than a decade ago are considered to have played a crucial role in getting Europe’s largest economy going again.

Part of former Chancellor Gerhard Schröder’s Agenda 2010 reform package, the Hartz measures, modernized Germany’s Federal Labor Agency with the intention of making the unemployed less reliant on benefits and more responsible for finding work.

And at first glance, it worked splendidly: A decade ago, some five million people were jobless, today fewer than three million are. The country’s unemployment rate is the lowest in the European Union at 4.8 percent, its lowest level since Germany’s unification in 1991.

But these figures mask the Labor Agency’s poor performance. Germany’s largest bureaucracy seems to be a bottomless pit that is more a beneficiary of the booming economy than an institution working to make out improvements.

Even streamlining its own internal structures has stalled: Although the number of unemployed has dropped dramatically over the years, there are actually more people working at the Labor Agency today than a decade ago.

“Of course, we are adjusting to the changes on the labor market,” the labor agency’s boss Heinrich Alt told Handelsblatt.

But that’s a slow – an extremely slow – process. The authority now wants to shed 17,000 positions out of a total of 100,000 by 2019.

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