Booming German Employment Masks Shrinking Industry

Booming German Employment Masks Shrinking Industry

Last year a record 40.4 million people were employed in Germany. However, behind the strong figures lurks a worrying structural change. Industry, the traditional motor of the German economy, is seeing its importance dwindle.

Germany, Europe's biggest economy, has emerged from the worst economic crisis in decades -- and it is in far better shape than most expected. Last year's job figures point to the extent of the recovery: More people than ever were employed in Germany.

In 2010, an average of 40.37 million people were working. That represents a rise of 197,000 jobs versus a year before, official statistics show. The previous record was struck in 2008. In 2009, the workforce shrunk by just 45,000 despite a severe economic downturn.

According to official estimates, the German unemployment rate fell to 6.8 percent, down from 7.4 percent a year earlier and below that of many of the country's European counterparts. Yet despite these strong statistics, it is too early to celebrate.

Industry is Shrinking

On closer inspection, the impressive figures mask a less desirable trend: The job market boom has occurred in the more marginal and unstable parts of the economy.

For example, about 5 million Germans have a job which pays just €400 ($534) a month and more than 2.2 million people boost their earnings through extra work on the side.

Meanwhile, increasing numbers of those hunting for secure employment end up at a temping agency, a sector which is going from strength to strength. Despite the country's robust economic outlook, more than 900,000 Germans are only able to work as and when they are needed.

The latest statistics also indicate that the German economy is in the throes of a structural change. Last year almost three-quarters of workers were employed in the booming services sector. In 1991, less than 60 percent of people worked in the sector, but by 2010 that figure was 73.5 percent.

In contrast, fewer people are working in more traditional jobs. Last year, only 2.1 percent of people worked in agriculture and forestry, around half the figures for 1991. Meanwhile, employment in the construction sector slowed to 5.5 percent of the total number of jobs -- a reduction of around one-third since 1991.

One significant change is afoot in the manufacturing industry, which saw its share of employment dip from 29.3 percent to 18.9 percent since 1991. During the recent economic crisis, Germany's all-important industrial sector dipped one percentage point each year.

jas/Spiegel