Home > Uncategorized > Some graphs 1. German unemployment

Some graphs 1. German unemployment

Wages

The coming days I will post some graphs. The first I made to answer the question if East German unemployment was finally coming down.  East Germany has experienced sky-high unemployment for decades despite massive transfers and despite a wage level which is supposed to be 25% lower than in West Germany. But at this moment, East German über-unemployment has more or less disappeared, at least compared with the German version of the rust belt (Stainless steel belt? Nutzeisen belt?). Two remarks:

  • German unemployment is developing favorably. But comparison with Bavaria shows that there still is ample labour market slack.
  • If neoliberal wage restraint policies plus massive transfers led to two decades of almost 20% unemployment in East Germany, how long will it take for Greek unemployment to come down? Four decades?
  1. J Ruivo
    March 19, 2017 at 11:31 pm

    Less.

    • visitor
      March 20, 2017 at 8:34 am

      If it is in the order of a generation (i.e. 25 to 33 years), then it does not matter for the affected people whether it is less than 40 years or not; their professional and economic perspectives will have completely and irretrievably disintegrated anyway. Their only, frail lifeline is emigration.

      Notice that there was _massive_ internal emigration from Eastern to Western Germany during that period. Eastern municipalities were reduced to levelling entire city blocks because there were simply no longer enough inhabitants to sustain the maintenance of the housing and associated public infrastructure.

      In 2009, the total transfers to support the Eastern Bundesländer had already amounted to €1300 bn…

      Ergo, if current policies are pursued, Greece is doomed to become a Third World country.

      • Blissex
        March 20, 2017 at 11:09 pm

        «if current policies are pursued, Greece is doomed to become a Third World country»

        Well, if greek politicians continue to keep those policies, too bad for their voters, despite the very generous help provided by EU countries like France and Germany (and the UK until now), but despite that it is interesting to look at this table of mean PPP income in 2014 per 16-64 resident:

        http://ec.europa.eu/eurostat/estat-navtree-portlet-prod/NodeInfoServices?lang=en&code=ilc_di03

        Portugal 10,103
        Estonia 9,429
        Czech Republic 9,033
        Greece 8,991
        Slovakia 7,854
        Latvia 6,716
        Lithuania 6,379
        Poland 6,311
        Croatia 6,073
        Hungary 5,281
        Bulgaria 4,189
        Serbia 2,812
        Romania 2,517

        Income in Greece is in the same range as Portugal, Estonia, Czechia, Slovakia, which are not third-world countries, and was 42% higher than in Poland, 48% higher than in Croatia, 70% higher than in Hungary, 114% higher than in Bulgaria, 257% higher than in Romania, all EU countries.

        Statements like «Greece is doomed to become a Third World country» seem to me to be laughable anti-greek propaganda.
        Greece has been badly governed by a kleptocratic political class, but even they cannot turn Greece into a third world country.

      • Blissex
        March 20, 2017 at 11:29 pm

        As to the laughable anti-greek propaganda, compare with a few other countries 2001 to 2014:

        AGE: From 16 to 64 years
        SEX: Total
        INDIC_IL: Mean equivalised net income
        UNIT: Purchasing power standard (PPS)

        TIME: 2001 2004 2008 2012 2014
        Ireland 15,256 17,630 22,224 19,890 20,134
        Italy__ 13,141 16,147 18,045 18,375 17,652
        Spain 13,512 13,885 18,323 17,103 16,744
        Portugal 11,251 10,839 12,539 12,292 12,431
        Greece 11,110 12,361 14,720 11,320 10,080

        All of these countries have had falling mean PPP incomes from 2008 to 2014, but they have had quite different trajectories: Italy and Portugal did not have a particularly huge government created debt bubble, Ireland and Spain had huge government created property bubble, and Greece had a huge government created import bubble.
        Greek performance has been particularly bad, especially compare to Portugal whose government went for steady, modest growth; even mad-bubble Spain and Ireland managed to grow average income 24% and 32% between 2001 and 2014.
        But still Greece however badly governed managed to maintain much the same lower-end first-world level of income between 2001 and 2014 (“only” a 9% drop).

  2. Blissex
    March 20, 2017 at 10:48 pm

    «If neoliberal wage restraint policies plus massive transfers led to two decades of almost 20% unemployment in East Germany, how long will it take for Greek unemployment to come down?»

    That’s an internal matter for the greeks to resolve: they had in 2014 the same GDP per capita as in 2001 when “official” unemployment was 10-15%, and now they have 15-20% “official” unemployment, and 12% higher GDP per worker. That is what has caused the increase in unemployment in 2014 with respect to 2001.

    Between 2004 and 2012 in particular Greece enjoyed massive fiscal transfers (disguised as loans) of 20-25% of GDP, and that reduced unemployment not very much, and employment did not grow much either.

    Here my usual numbers that propagandists are careful to avoid mentioning, all increases/decreases for 2008 and 2014 wrt to 2001 (year in which the greek economy entered the eurozone and year that was considered an affluent country doing pretty well:

    research.stlouisfed.org/fred2/series/NAEXKP01GRA189S
    GDP inflation adjusted, total and per-worker:
    2001: €197 billions [€47,900 per worker]
    2008: €250 billions +26% [€55,300 per worker +15%]
    2014: €187 billions -15% [€53,700 per worker +12%]

    research.stlouisfed.org/fred2/series/NAEXKP02GRA189S
    research.stlouisfed.org/fred2/series/BPBLTT01GRA636S
    Final private consumption, inflation adjusted, and net imports:
    2001: €132 billions [net imports €10 billion]
    2008: €172 billions +30% wrt 2001 [net imports €35 billion +260%]
    2014: €130 billions -2% wrt 2001 [net imports approx. zero -100%]

    appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_di03
    Average yearly income, age 16-64, PPP adjusted:
    2001: €9,639
    2008: €12,825 +33%
    2014: €8,991 -7%

    research.stlouisfed.org/fred2/series/LFEM64TTGRA647S
    research.stlouisfed.org/fred2/series/LFUN64TTGRA647S
    Employed, unemployed, work force:
    2001: 4.11m, 0.51m => 4.62m
    2008: 4.52m +10%, 0.39m -24% => 4.91m +6%
    2014: 3.48m -15%, 1.27m +149% => 4.75m +3%

    It is pretty obvious that the +149% increase in the number of unemployed between 2001 and 2014 is not a credible number, given that final private consumption has shrunk only 2%, and average yearly income has shrunk only 7%, and is still higher than in 9 other EU countries.
    What has happened is that GDP per worker has increased 12% between 2001 and 2014, and the number of workers has accordingly declined 15% with GDP declining 7%.
    Greek statistics are “surprising” to say the least.

    • Blissex
      March 20, 2017 at 11:47 pm

      Sorry about this, I looked again at this for Greece:

      «appsso.eurostat.ec.europa.eu/nui/show.do?dataset=ilc_di03
      Average yearly income, age 16-64, PPP adjusted:
      2001: €9,639
      2008: €12,825 +33%
      2014: €8,991 -7%»

      and I have mixed numbers and mislabeled a bit. It is also interesting to look at the numbers with mean vs. median and euros vs. PPP:

      INDIC_IL: Mean equivalised net income UNIT: Purchasing power standard (PPS)
      2001: €11,110
      2008: €14,720 +32%
      2012: €10,080 -9%

      INDIC_IL: Median equivalised net income UNIT: Purchasing power standard (PPS)
      2001: €9,639
      2008: €12,825 +33%
      2014: €8,764 -9%

      INDIC_IL: Mean equivalised net income UNIT: Euro
      2001: €8,703
      2008: €13,213 +51%
      2014: €8,991 +3%

      INDIC_IL: Median equivalised net income UNIT: Euro
      2001: €7,552
      2008: €11,512 +52%
      2014: €7,817 +4%

    • merijntknibbe
      March 21, 2017 at 11:37 am

      Dear blissex, good data, but….

      Two points: Greek unemployment is still about 23% and projected to stay ultra high, wrecking ambitions of people and destroying lives, aside from this it will, surely as about 90% of these unemployed do not get any kind of welfare or dole and live in poverty. Inequality is on the rise, poverty statistics show an alarming pattern.

      Second: we have somehow to come to grips with the blessing of increasing productivity, either by higher levels of material prosperity or shorter working hours. But not by increasing unemployment.

      Merijn Knibbe

      • Blissex
        March 21, 2017 at 3:36 pm

        «Greek unemployment is still about 23% and projected to stay ultra high, wrecking ambitions of people and destroying lives,»

        But the greek government has ample means to give workfare jobs or welfare support to that 23%, as productivity has improved by 12% since 2001 and levels of income in Greece are much higher than in Romania or Bulgaria or even Poland. Output per worker in Greece is €53,000 per year, surely greek workers can afford to fund “solidarity” with their unemployed compatriots.

        Alternatively, the UK or the USA could make to Greece fiscal transfers of 20-25% of greek GDP to the greek government to redistribute from rich american or british taxpayers to poor greek unemployed people, if rich greek taxpayers are unwilling.

        «aside from this it will, surely as about 90% of these unemployed do not get any kind of welfare or dole»

        Yet amazingly private consumption has not fallen substantially wrt to 2001 even if the population has remained constant, and neither has median income.
        Even more amazingly there are according to official statistics 1.3 million unemployed workers in Greece, and 1.1 million immigrant workers, mostly from Albania and Turkey, which are even outside the EU. Such a large number of immigrants suggests a wide availability of jobs.
        Greek statistics are very surprising indeed.

        «and live in poverty»

        Well, I wonder how much poverty happens in Romania and Bulgaria where median income is a small fraction (1/4-1/3) of the greek median income, and I wonder why some people spend so much time attacking Greece for its poverty instead of Bulgaria and Romania.
        Surely the corrupt kleptocratic greek political class deserves much criticism, but there are bigger priorities in Europe.

        Also as to poverty there are very big regional differences: people in Attica and the tourist islands are usually doing well, the dire poverty has always been in the backward interior.

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