German unemployment decreased by a non-seasonally adjusted 162,000 in April. Officially, 3.406 million Germans are currently unemployed. In seasonally-adjusted terms, unemployment dropped by 68,000, pushing the seasonally-adjusted unemployment rate to 7.8%, from 8.0% in March. This is the lowest unemployment rate since December 2008 and illustrates the strong Spring revival of the German labour market.
Statistical changes and active labour market policies, including the famous short-work schemes, made the labour market the bright spot of the recession. Moreover, the formerly very rigid German labour market has slowly but surely become more flexible. Even without official short-work schemes, social partners in most sectors can agree on a temporary reduction of the regular working week. The downside of this flexibility of course is that disposable incomes declined which explains why private consumption has not kept pace with the labour market.
Looking ahead, leading indicators, historical evidence and recent wage settlements with job guarantees all point to a further stabilisation of the labour market in the coming months. The positive trend should also be supported by the latest decision from the German government to extend short-work schemes once again until March 2012. However, as a continued stabilisation of the labour market should initially be marked by a pure unwinding of short-work schemes and increasing working hours, employment growth will be sluggish. Still, even if it is only a small boost, the labour market could end the private consumption recession of late-2009.
At least for the time being, the German good-news-show of the last weeks continues. The harsh winter, the Greek crisis, they have all left the German labour market unperturbed.