Studies of Economic Change

Variations

First the reduction of the forecasted period to the years 2005 to 2030 enables the analysis of the impact of the variation of the parameters in detail. Second the change of the number of unemployed people since 2005 enables to comply with the implication of the differences between forecasted and actual figures as mentioned in the last subchapter. The second axis on the right site of the graphic shows the absolute figures according to the basic forecast.

Should the past trends continue the unemployment is expected to increase by about 1.5 million in 2013 (which equals 7.5 million related to the basic forecast). Despite the demographic development the number of unemployed in 2030 is expected to be only 0.5 million below the figure of 2005 (which equals 5.5 million related to the basic forecast). Seeing the reduced total population until then it cannot be said that the problems of the labour market are solved.

As a reminder it should be repeated that the price of the believed reduction of the unemployment to about 3.5 million in 2008 is high: The increase of the minor employment equals about 1.0 million additional unemployed, the increase of the export surplus equals about 2.0 million additional unemployed, and the increase of short-term employment equals about 0.7 million additional unemployed. The choice of the date the forecast starts with is therefore not of the main interest. The year 2005 is not too far away from today and still shows the impact of the demographic development.

Because of the unreliability of long-term forecasts the impact of altering parameters on the unemployment rate is shown. Therefore it is demonstrated how the unemployment rate changes if the economic growth is 2.1% or 2.4% instead of 1.8% and if the hours worked are reduced by 6 minutes or 12 minutes instead of 0 minutes from the year 2010. A significant reduction of the unemployment rate is not visible in any case.

Consequently additional measures to reduce the unemployment rate are necessary. The blue line represents the impact of economic growth supported by public spending until 2010 which for example leads to growth rates of about 2.5%. Parallel the hours worked are reduced by about 4 hours a week until 2015 which equals an annual reduction of 24 minutes a week.

Economic growth induced by public spending has according to the "law" of diminishing marginal utility only an impact in the short-term. Therefore the reduction of the hours worked is the only way to have an impact on the solution of the social and economic problems.

The acceptance of unemployment or wage and social dumping is not a solution.

A stagnating productivity (caused by wage dumping) and the dependence on the export surplus are improper solutions as well.