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"The citizen money sends a fundamentally wrong signal"

Previous crises have often been accompanied by a rapidly increasing number of unemployed.

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"The citizen money sends a fundamentally wrong signal"

Previous crises have often been accompanied by a rapidly increasing number of unemployed. This time it could be different - at least in Germany. However, the actual reason for this is also one of the biggest problems for the labor market and the economy: the ever-increasing shortage of skilled workers. Almost two million jobs are currently vacant, more than ever before.

According to calculations by the management consultancy Boston Consulting Group, this costs 86 billion euros in lost economic output every year. To counteract this, the traffic light coalition wants to reform immigration law. Because the number of skilled workers who find targeted jobs from abroad is far below plan so far. In an interview with WELT, job market expert Holger Schäfer from the Institute of German Economics (IW) talks about why the country is slowing itself down.

WORLD: Mr. Schäfer, given the huge shortage of workers, will it soon be normal for some sectors to remain understaffed, such as restaurant service?

Holger Schäfer: Yes, unfortunately we have to get used to that. But authorities will also limit their service, sometimes only offering it on individual days. These constraints will continue to increase as the amount of available labor decreases. At the moment it doesn't look as if it will be possible to compensate for this.

WORLD: So even longer waiting times and more sluggish bureaucracy than already.

Schäfer: You can adapt to that. Some are already used to long waiting times, for example in Berlin. But there are more serious cases. Craftsmen, for example, will be even harder to come by. Longer waiting times are also to be expected for medical care.

WORLD: Is the public service heading for a collapse?

Schäfer: That is also a question of efficiency. Politicians have to ask themselves: Is every task that is supposed to be done there really necessary or can it be dispensed with? The increase in staff makes sense in some areas, such as childcare, education or the police. However, the prioritization of tasks will be a key issue.

WORLD: So better management is needed.

Schäfer: Yes, and not only that. Politicians have to check carefully whether there are processes that can be dispensed with and thus reduce bureaucracy. For example, a city has to think twice about whether it really needs someone to monitor the ban on patio heaters.

WORLD: On the other hand, there are complaints that the public service has been ruined in the past few years.

Shepherd: It's a fairy tale. In some places there is certainly shortage and overload. But employment has been rising for ten years. There can be no talk of broken savings. In any case, hiring more and more people cannot be the only way.

Despite the energy crisis, unemployment figures have fallen. "Economic development has decoupled a bit from the development of the labor market," says Andrea Nahles, head of the Federal Employment Agency. The skills shortage is still dominant. However, that could also change.

WORLD: Let's take a look at the current crisis. Shouldn't the number of unemployed skyrocket?

Schäfer: One could expect that. But labor demand from companies is relatively stable. With a view to the many employees who will retire in the next few years, they are trying to strategically secure their specialist base. No one wants to let go of employees lightly, so many are cautious about downsizing. Because companies know exactly that it will be increasingly difficult to recruit new staff in the future.

WORLD: Before the energy crisis, it was often said that workers had a huge selection because of the great shortage and could pick the best offer. Was that a short-lived trend that is now over?

Schäfer: During a crisis, recruitment usually decreases. That was also the case at the beginning of the corona crisis. With a delay, this will be reflected in the unemployment figures. They will increase slightly, but not extremely. I expect an increase of 100,000 to 200,000 people. Because the number of vacancies is so high that more people are being hired, and there are also retirements. However, the condition for this development is that there is no gas shortage.

"This gas price cap has a mathematical effect of around 30 percent on household gas prices," says Johannes Mayr. Nevertheless, "the inflation forecast is subject to considerable uncertainty," says Eyb's chief economist

Source: WORLD / Dietmar Deffner

WORLD: And the short-time allowance must be part of the bill.

Schäfer: I am assuming that these numbers will also increase.

WORLD: The new head of the Federal Employment Agency, Andrea Nahles, finds empty coffers - precisely because the short-time allowance has cost so many billions.

Schäfer: In any case, the reserve of over 20 billion euros that existed before Corona is gone. If a new wave of short-time work figures comes, the job centers face a problem of additional workload. Everything that the BA wants or has to spend on other tasks can then only be paid for by the federal government.

WORLD: With new billions in loans.

Schäfer: Yes, although politicians should make a commitment: New deficits will be made available as grants and not as loans. Because that would mean that unemployment insurance contributions would continue to rise – which would make overcoming the crisis even more difficult.

WORLD: The traffic light now wants to reform the immigration law. Do "Chancenkarte" and Co. really help to get more foreign skilled workers into specific jobs?

Schäfer: Our immigration law is very liberal. In many cases, anyone who has a qualification at the level of vocational training will receive a residence permit. What is missing are the procedures. Sometimes people wait a year or longer for a visa - that's a huge hurdle. Professional recognition is also slow. It is understandable that the quality is checked - after all, we are talking about "skilled workers". But both take too long. And that doesn't exactly appeal to talent. Germany competes with a number of other countries for them.

WORLD: High electricity prices, high taxes, the lame administration. All of that doesn't really attract her.

Schäfer: Yes, even the German language is relatively difficult. Anglophone countries are more attractive. And with the restrictions mentioned, we make it difficult for ourselves.

WORLD: The competition is outstripping Germany?

Schäfer: She has been for a long time. Germany is already running under "further running". In order to become more attractive, the deficits have to be eliminated. We are also short-sighted when it comes to recruitment, for example by excluding temporary work. This is nonsense. Recruitment of skilled workers is the DNA of this industry, many companies have offices abroad. A missed opportunity.

WORLD: Hubertus Heil, the Labor Minister, says that opens the door for exploitation. People could end up in precarious employment.

Schäfer: Temporary work is not precarious employment, nor is it exploited. These are regular employers, the tariff coverage is almost 100 percent. There is no reason for this assumption.

WORLD: The labor market is also facing the major reform of the new citizen income. Some calculation examples are currently circulating, according to which it is hardly worth working because what is left over corresponds to the basic income plus grants. Where is the limit?

Schäfer: Basically, if the basic security increases, as will be the case, the gap decreases - and with it the incentive to accept work. But the law ensures that anyone who works - no matter how little they earn - has more than those who don't work. This is regulated in the Social Insurance Code by the employment allowance. The other question is whether what you have in extra disposable income is enough for the extra hours of work you put into it.

WORLD: Due to the increased energy costs, what remains net is getting closer and closer to the limit of citizen money for many.

Schäfer: Yes, but it will never be the same. The one who works will always have more money at his disposal. Let's take an example where heating costs increase sharply. Those who work and are on low wages have so far had no entitlement to social benefits. However, the cost explosion can result in a claim, for example to housing benefit or supplementary unemployment benefit II. The law therefore ensures that a certain distance is always maintained. You can put a question mark behind it as to whether it is big enough.

WORLD: But there can be cases in which it is "more worthwhile" not to work instead of working?

Schäfer: Yes, but only if the supplementary social benefit is not applied for. Everyone has to take care of that themselves. There is certainly a certain inhibition threshold when you suddenly have to apply for help as a full-time employee in the job center. Theoretically, this means that some would have the right to do so, but do not perceive it at all - and then have less than with citizen money.

WORLD: How much more are there through grants?

Schäfer: The maximum amount of the employment allowance in the new basic allowance is 348 euros. That's what, at best, someone earns more by going to work.

WORLD: You consider citizen income to be counterproductive.

Schäfer: Yes, but for different reasons. The period of trust in the sanctions is my main point of criticism. This contradicts everything we know about integration into work. The sanctions will not be completely abolished, but they will be greatly reduced. The balance is disturbed there. There are many studies that show that sanctions work. They also have side effects, of course. But the integration effect is there. It is now being given away, especially in the first six months. The citizen's allowance sends the wrong signal through the waiting periods, also when counting the assets and the costs of accommodation.

WORLD: What signal is being sent out?

Schäfer: That those who are new to the relationship can take their time for the first time. You can settle into the system at your leisure and not much is required. But that is wrong. Because often it is about people who have been unemployed for a long time. For them, every day that is spent outside of the labor market counts. The longer you remain unemployed, the more your skills erode, in the worst case your social skills too. Like getting up in the morning and getting to work on time. So I think the signal "take your time first" is fundamentally wrong.

WORLD: A study by the “Sanktionsfrei” association, on the other hand, states that sanctions would be counterproductive.

Schäfer: The results are in blatant contradiction to all other studies in Germany and internationally. The Federal Employment Agency says the same thing from experience.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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