Overstating the Importance of Temporary Employment in Germany

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Wednesday, 20 April 2011 04:46

The NYT told readers that:

"The rise of temporary labor has contributed to a plunge in German joblessness. The unemployment rate has fallen to just above 7 percent, or 3.2 million people, from nearly 12 percent in 2005, or almost 5 million people."

However the piece also reports that there are fewer than 1 million temporary workers today. Since the number of temporary workers was not zero in 2005, the impact of increased temporary employment on total employment would have to be somewhat limited. If temporary employment doubled between 2005 and the present (an increase of 500,000 jobs), then this would account for about 15 percent of the growth in total employment.

It is also worth noting that Germany's unemployment is actually just 6.3 percent using the OECD's methodology. This methodology is similar to the one used to measure unemployment in the United States. The official German rate counts many part-time workers as being unemployed. This unemployment rate should not be used in an article written for a U.S. audience.