Labor market - Unemployment costs rise in 2023 and 2024
After the cost of unemployment in Germany fell in 2022 following the coronavirus pandemic, labor market researchers expect fiscal costs to rise again in 2023 and 2024.
The average annual number of unemployed people in 2023 has climbed by almost 200,000 compared to 2022, said Enzo Weber from the Institute for Employment Research in Nuremberg. In addition, the standard rate in the citizen's allowance was increased by 11.8 percent at the beginning of the year due to inflation,
He does not expect any fiscal relief for 2024 either. " Unemployment at the start of the year is already likely to be around 100,000 higher than the annual average from 2023, and a further standard rate increase of a good 12% will follow in January," said Weber. "In order to reduce costs further, the current upward trend in unemployment would have to be reversed."
Corona has interrupted the long-term downward trend
The cost of unemployment in Germany has fallen significantly over the past 20 years or so in relation to gross domestic product. In 2004, 4.2% of economic output was still being spent on financing unemployment. In 2019, it was just under 1.5 percent. The downward trend was interrupted in the coronavirus years 2020 and 2021.
In 2022, the costs amounted to 60.6 billion euros or 1.56% of gross domestic product. 55% was accounted for by transfer payments such as unemployment benefits and citizens' benefits. The remaining 45 percent of the costs are due to a shortfall in tax and social security revenues.
Weber urged the Federal Employment Agency to build up a financial reserve. The reserve of almost 26 billion euros had been used up during the coronavirus pandemic. The Federal Employment Agency plans to start building up a reserve again in its budget. 2.7 billion is planned for 2023 and 2.1 billion for 2024. The aim is to be back at around 26 billion in ten years, which is necessary to finance a medium recession. However, the build-up of reserves could come to a standstill: Over the next four years, the federal government is demanding the return of subsidies from the coronavirus era amounting to 5.2 billion euros.
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Source: www.stern.de
