Benchmarking Germany: Job Creation a la Merkel

By Shlomo Maital

job creation

proporiton with jobs

change in proportion of people ages 15-64 with jobs, since 2007

Floyd Norris’ “Off the Charts” feature in the New York Times finds clever ways to present complex data in clear, meaningful visual ways. In his latest effort, today (April 19-20), he charts the “proportion of people with jobs”, by age group, dating from 2007.

This is a much better statistic than the unemployment rate, because when the poll person knocks on your door and asks you, “are you working now?”, if you say “no”, the next question is, “have you been actively seeking work in the past 2 weeks?” If the answer is no again, you are not unemployed, because, you are not even in the labor force. So “proportion of people with jobs” is a good statistic to track.

   Norris’ charts show that both America and the EU (excluding Germany) are abysmal; nearly 5 per cent fewer people aged 15-64 have jobs today than in 2007, and this is after the two biggest economies in the world have ‘recovered’.   Britain is nearly back to what it was in 2007; the Conservative government under Cameron is taking credit for this, giving credit to its austerity program.  I think the job recovery was in spite of austerity, not because of it.  Britain’s pound sterling has dropped a lot, helping its exports, like Germany. 

   But the stellar performer is Germany! Germany has 4 percentage points MORE people working, ages 15-64, than in 2007.    

     Why?

     I have some explanations. Germany has benefited from the plummeting euro, and boosted its exports. Germany has succeeded in boosting exports to China. Germany maintained wage restraint and restrained social benefits, and its unions have been highly responsible.   Germany avoided shedding excess labor during the downturn and hence preserved the high skills of veteran workers, often the first to be dumped.

     But this is not my point. When job creation is the #1 key issue almost everywhere, and when one country outperforms all the rest by a huge margin, should the decision-makers not be beating a path to its door to find out the secret?   I see no evidence this is happening.

     Obama – Send your civil servants to Berlin. Tell them to stay there until they come home with a strong plan to boost job creation, and reduce the huge numbers of discouraged workers, who do not appear in unemployment stats and hence who are invisible. Tell them to get to the bottom of Germany’s success.   And while they’re there, ask them to discover why Chanceller Angela Merkel is an effective competent leader, while you, Obama, seem unable to organize a paper bag (or a simple website).

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