Studies of Economic Change

Step 1

As we have argued before in chapter 2 about the demographic development the number of the employed in relation to the population is the most important figure to sustain the social welfare system. In this study this measure should be called the employment rate. (Note: To distinguish the terms it has to be noted that the analysis about the demography used as key figure the labour force participation which included the unemployed in addition the employed as well.)

At first part A of step 1 starts with a forecast of the number of unemployed by considering the expected demographic development in the long-term for some decades. For this purpose the characteristic shape of the development of the unemployment forecasted in chapter 3 can be applied.

The assumption of this basic forecast is the alternative of political passivity. This means in detail:

Variation 2 of the 8th population forecast of the "Statistisches Bundesamt", linear increase of the labour productivity by about 0.80 Euro each hour each year, linear increase of the gross domestic product by about 400 Euro each capita each year, the "minimum" forecast of the labour force participation according the demographic development of chapter 2 and an average number of hours worked which remain on the same level of about 38.2 hours a week.

The characteristic shape of the forecast of the number of unemployed consists of a clear and sharp increase which comes to an end in about one decade due to the demographic development. Finally the absolute number is expected to fall down to a significant lower but still quite high level.

It should be mentioned as a reminder that the basic forecast of the unemployment assumes an increase from 3.5 million in 1995 to nearly 7.5 million in 2013. This figure is expected to fall down to about 5.0 million in 2030 despite the demographic development. Considering the declining population until then we cannot talk about a real relief. Furthermore it could be shown that the alleged false forecast is in fact correct if the increase of minor employment and the export surplus is considered as well.

In part B the forecast of the number of unemployed is transferred to the employment rate. Contrary to the common use the x-axis starts with 100% and ends 0% to highlight the characteristic shape of the forecasted number of unemployed. The main important question is if the decreasing employment rate which can be expected under the assumption of about 7.5 million unemployed causes a threat to the social cohesion.