What causes unemployment

unemployment

Table of Contents

  1. Concept and essence
  2. Definition and problems of their collection
  3. Cost of unemployment
    1. Total fiscal costs
    2. Macroeconomic costs
    3. Social costs
  4. Types or manifestations
    1. Level-related unemployment
    2. Mismatch-related unemployment
    3. Manpower-related unemployment
  5. Basic strategies to fight unemployment
    1. Increase in demand for labor
    2. Reduction of the labor supply
    3. Labor market equalization policy
  6. Persistence, hysteresis and inflation-stable unemployment: Already relics from bygone times?
  7. Current developments and outlook

Concept and essence

In the case of less flexible wages or even wage rigidity downwards, there is a temporary or permanent lack of employment opportunities for some of the employees who are able to work and are willing to work at the prevailing wage level (wage level-related aggregated labor market imbalance). This real wage level, which does not conform to full employment, can be caused, for example, by excessively high statutory or collective bargaining minimum wages, by insider power (insider-outsider theories; see labor market theories) or by extensive protection against dismissal, which on the one hand increases transaction costs and on the other hand hampers investment and thus Capital shortage unemployment implied, caused (institutionally determinedunemployment).

Involuntary unemployment can occur on the one hand as a macroeconomic, sectoral, regional or job or qualification-specific employment deficit: private companies and the public sector ask for less workers than they offer under the given conditions (level-relatedunemployment). When the potential labor force rises sharply, a surplus of supply on the labor market can also be responsible for underemployment if conditions are slow to adapt to the new circumstances (alabor force-related unemployment).

Even if the number of unemployed is identical to the number of vacancies in the aggregate, in this case one speaks of more balancedunemploymentSince, from a purely arithmetical point of view, the labor market has been cleared, this fact does not say anything about a factual clearing of the market: If the characteristic profiles of the unemployed - e.g. with regard to qualifications, regional availability, wage expectations or motivation - are not compatible with the requirement profiles of the vacant positions are, remains Mismatch-unemployment exist (see also Beveridge curve).

Definition and problems of their collection

In principle, unemployment can be defined as the totality of those willing and able to work who, under the given market conditions, cannot find employment that is adequate to their inclinations, needs and skills. This general economic definition is assumed below.

It differs from the way in which the unemployed are recorded in official statistics. The prerequisite for entry in the register data of the Federal Employment Agency is the registration of the unemployed with an employment agency (see labor market policy) or a local authority providing basic security for jobseekers (job center; benefits for integration into work according to SGB II). Unemployed persons according to Book III of the Social Security Code (SGB III) are people who, as with the claim for unemployment benefit, are temporarily not in an employment relationship, are looking for a job subject to compulsory insurance, are available to the employment agency's recruitment efforts and have registered as unemployed (Section 16 I SGB III). Participants in measures of active labor market policy are not considered unemployed (Section 16 II SGB III). In the second book of the Social Security Code (SGB II), unemployment is not explicitly defined. Basically, the definition according to § 16 SGB III is also to be applied here.

Registration, contributions to unemployment insurance and availability for job placement (labor market policy) are therefore prerequisites for receiving unemployment benefit or - in the case of need - unemployment benefit II (from federal funds or general tax revenue). In 2015, of the 2.8 million registered unemployed, less than a third were recipients of unemployment benefit and more than two thirds were recipients of unemployment benefit II (see also Figure 4 below). However, official statistics cannot do that factual To determine the extent of unemployment: On the one hand, the formal registration as unemployed can only be done with the aim of receiving social benefits. In addition, illegal employment (in the shadow economy) contributes to the actual level of unemployment aboveis appreciated. On the other hand, those persons are not recorded as unemployed who belong to the hidden reserve (hidden reserve) (concealed or hidden unemployment). If the actual loss of work were also measured in hours and not in people, the extent of underemployment, e.g. in the case of short-time work, would also be higher. If the two distortions in the official unemployment statistics are assessed together, it can be assumed that the actual extent of unemployment is clear underis appreciated.

Regarding the difference between unemployment and unemployment, which is not pursued further here, see also unemployed and unemployed or unemployment rate and unemployment rate.

Cost of unemployment

Total fiscal costs

The direct payments of unemployment benefit (as an insurance benefit) and unemployment benefit II (as a social benefit) as well as the contributions to the health, pension and long-term care insurance of the benefit recipients arise direct fiscal costs. Unemployed people without benefit entitlements also incur expenses for social benefits and housing benefits. The loss of taxes (wage and income taxes, consumption taxes and, if applicable, trade taxes) and social contributions (for health, pension, long-term care, accident and unemployment insurance) are added to these direct costs indirect fiscal costs caused by unemployed people not working. The Institute for Employment Research (IAB), the research facility of the Federal Employment Agency, estimates the total fiscal costs of an unemployed person at an average of almost 20,000 euros per year. Overall, the total fiscal cost of unemployment in 2015 was over 56 billion euros. Around 55 percent was accounted for by the payment of unemployment benefit and unemployment benefit II, and around 45 percent for the shortfall in taxes and social security contributions. The overall fiscal costs of unemployment have fallen by almost 40 percent with the decrease in underemployment since the Hartz IV reform (Hartz laws) came into force in 2005.

Macroeconomic costs

In addition to the total fiscal costs, the opportunity costs of unemployment must be taken into account, so that the macroeconomic costs are far higher than the total fiscal costs. They are determined from the lost gross domestic product (GDP) ("output gap"), which is caused by the extent of underemployment (Okun’s law). This loss of welfare increases due to the fact that unused human resources are subject to increasing devaluation over time (human capital theories; labor market theories) and possibly the tax burden in the economy increases. All of the factors mentioned reduce the production potential (the potential added value) and thus the growth potential of the economy considerably.

Social costs

The macroeconomic costs are increased directly or indirectly by the hardly quantifiable individual and social costs of unemployment. These include, for example, psycho-social consequences through stigmatization and social exclusion, impairment of self-esteem, socio-cultural isolation and thus loss of social competence and social recognition, higher risk of illness and suicide, risk of impoverishment, decreasing solidarity and the associated risk of social unrest as well as political polarization, increase in crime and alcohol or drug consumption, decline in the quality of life even among those still employed because their fear of losing their job is more pronounced in times of high unemployment (fear of decline). That is why they change jobs less often and thus possibly prevent better matching and a more efficient allocation of resources (see e.g. addiction theories; labor market theories). The negative consequences of those affected by unemployment can become entrenched and are sometimes even visible over generations, which is reflected, for example, in significantly poorer educational opportunities for their children.

Types or manifestations

Although the types of unemployment partially overlap, the following classification is helpful for identifying the causes and combating different forms.

Level-related unemployment

a) Seasonal unemployment: arises when production and demand depend heavily on seasonal fluctuations. Biological, climatic, behavioral and institutional factors can cause discontinuities in production and demand. Examples: Weather-related loss of work in the construction industry or in agriculture, elimination of behavior-related time congestion of demand for certain services (Christmas business, vacation time in the tourism industry, etc.). The extent of seasonal unemployment depends on the one hand on the extent of the sectors affected by it, and on the other hand on the extent to which the use of labor market policy instruments (e.g. winter allowance) prevents it from occurring or, if unemployment has occurred, opens up temporary employment opportunities in other sectors through placement activities. Overall, seasonal unemployment is more of a short-term nature, so that its “severity” is low.

b) Economic unemployment:It arises from cyclical fluctuations in the degree of utilization of the production potential and is largely evenly distributed across sectors, regions and occupational groups. Economists following the tradition of John Maynard Keynes (Keynesianism, New Keynesian Macroeconomics) see the cause in a general lack of demand on the aggregated goods market, which is reflected in a rationing of demand on the downstream labor market. In the case of pessimistic sales expectations by companies, for example, their investment activity falls, which leads to a loss of income and lower employment. The economy is in recession. The decline in overall economic demand can in principle be caused by all components of the gross domestic product (consumption, investment, government expenditure, external contribution). As soon as the reasons for the decline in demand have been eliminated or if the loss of income is compensated for by the use of countercyclical monetary and fiscal policy, the economy can return to an upswing phase. The smoothing out of fluctuations in demand in the private sector through state stabilization policy is intended to help stabilize economic development and thus avoid unemployment. As a short to medium-term phenomenon, cyclical unemployment should generally be of a temporary nature.

c) Growth deficit unemployment: The decline in the degree of utilization of the production factors can also be characterized by longer-term deficits in demand, the causes of which can be a sustained rise in the savings rate or, with decreasing product innovation, increasing market saturation. But a lack of financing options (especially in developing countries) or a lack of profitable investment opportunities can also influence and increase production potential Shortage of physical capital unemployment to lead. What these facts have in common is that they reduce (long-term) economic growth and permanently lower employment.

d) Labor cost-induced unemployment: The neoclassics (Monetarism, New Classical Macroeconomics) attribute level-related unemployment to the fact that the existing real wage is higher than the real wage in full employment and that there is thus an excess supply on the labor market(classic unemployment or Minimum wage unemployment). According to these ideas, the causes lie in wages that are too high and wages that are too inflexible, which do not adequately take into account the situation of scarcity, or in general in production and investment conditions that are too unfavorable. Due to pawl effects, underemployment can persist for a longer period of time.

e) Technologically conditionedUnemployment: Labor-saving technical progress can help ensure that unemployment becomes a permanent problem. This is especially true if the wage structure is not adapted to the changed scarcity conditions.

f) Efficiency wage-related unemployment: The efficiency wage theories (labor market theories) share the basic idea that higher wages for companies mean higher costs on the one hand, but can also have different efficiency effects on the other. To resolve this conflict of objectives, it is rational for companies to gradually increase wages as long as the implied increases in productivity and efficiency are greater than the increases in costs. This internal wage policy decouples wages from those of the external labor market. Even if workers could be recruited at lower wages, companies would not do so, because if the internal wage level fell, the efficiency losses would outweigh the cost savings. Efficiency wages can, too latentunemployment which exists when workers are underutilized, not deployed efficiently or because of control problems on the part of the superiors have the opportunity to work less productively than agreed.

G) Import price-related unemployment: At least since the oil price shocks in the 1970s and at the beginning of the 1980s, we have known that unemployment is also caused by an exogenous Supply shock can arise. Unemployment due to external supply shocks is expressed in abrupt and strong cost increases in the production area. These can be caused by strong devaluations of the domestic currency, by dramatic increases in interest rates (e.g. in the context of a financial crisis) or by drastic price increases on the international commodity markets. If it is not possible to compensate for the rise in the domestic price level (inflation) associated with the rise in import prices, for example, by revaluing the domestic currency or by reducing the relevant input coefficient, then only a nominal wage reduction on the employee side or the acceptance of losses in profit margins can in principle only prevent permanent underemployment on the employer's side (reduction of the surcharge rate on the piece profit).

Mismatch-related unemployment

a) Frictional unemployment: Frictional or fluctuating unemployment exists because some employees are always looking for other jobs (Search unemployment) (Addiction theories; labor market theories). Because there is no complete transparency on the labor market, when changing jobs, the times when the old job is ended and when the new job is started often differ, so that temporary unemployment occurs. Information about the new employer or job must be obtained and applications, presentations, aptitude tests and, if necessary, a change of residence carried out, which take time. An assessment of the "severity" of this form of underemployment depends on which side the impetus for changing jobs comes from (termination by the employee or dismissal by the employer). On the one hand, fluctuation unemployment can be aggravated by structural unemployment if, due to objective, subjective or organizational-institutional factors, those involved in the placement experience prolonged unemployment (Beveridge curve). On the other hand, the vacancy rate in the economic cycle is usually largely a mirror image of the unemployment rate, so that cyclical unemployment with a high degree of tension also extends the search time significantly in some cases. The extent of frictional unemployment is therefore determined overall by the extent of fluctuation and the time required between giving up the old job and accepting the new job.

b) Structural unemployment: This form of unemployment occurs when supply and demand on the labor market do not match because both sides are composed differently (structure of characteristics) in terms of placement-relevant characteristics such as age, qualifications, health, degree of employment, residence and production location (structure of characteristics).The decisive factor for the level of structural unemployment is the reasons why and at what speed the structure of demand and supply diverge. The main factors influencing changes in the structure of demand for labor are:
(1) Structure of the demand for goods: This changes mainly in sectoral terms. In the “three-sector hypothesis”, the structural change that has occurred in the past is interpreted to mean that the value added and employment shares of the primary (agriculture and forestry) and secondary sectors (manufacturing) will continue to decrease and that of the tertiary sector increase. Another cause of the structural change in the demand for goods results from the globalization of the economy and the increasing international division of labor. It leads to an increasing exchange of goods and finance between industrialized, emerging and developing countries. Due to the different high costs for the production factors labor and capital, there is a relocation of the production of labor-intensive products to countries with lower wages (developing and emerging countries), while the industrialized countries concentrate more on capital-intensive products, which in turn require more qualified workers make necessary. With this structural change in the demand for goods, the qualification structure of the demand for labor changes.
(2) Technical progress: This changes the demand for labor in two ways: On the one hand, it leads over Product innovations to new goods and increasing demand for goods, on the other hand it carries over Process innovations, to which also the increasing digitalization the world of work is one of the factors contributing to the varying degrees of acceleration in labor productivity. Delays in the mutual adjustment of the supply and demand structures are evidenced by the structural analyzes of the unemployed and vacancies. The spread of the unemployment rates for important structural features (e.g. region, qualification, occupation) is a measure of the segmentation of the labor market and thus of the level of structural unemployment. Permanent danger technology-induced unemployment can be countered by appropriate adjustments in the (vocational) education system, adequate flexibility of the labor market and an increased and differentiated use of labor market policy instruments, in particular to avoid (threatened) long-term unemployment among certain groups of people (long-term unemployed) (labor market policy).

Frictional and structural unemployment are a by-product of dynamic economies. The part that can be regarded as "inevitable" unemployment because it cannot be reduced even under the most favorable economic conditions (Base unemployment or Dregs unemployment), is also called after Milton Friedman, one of the main proponents of monetarism natural unemployment designated. This results from a lack of information, obstacles to mobility, adjustment costs, coincidences, institutional obstacles that hinder or oppose free wage formation on the labor market (wage reduction), and the like Market imperfections. It was originally defined as the unemployment rate at which the inflation rate is constant (Philipps curve), and is now reflected in the Non-Accelerating Inflation Rate of Unemployment (NAIRU) (see below).

Manpower-related unemployment

a) Demographic unemployment: This arises, for example, through the entry of baby boomers into the labor market, through an increase in the statutory retirement age for drawing a pension, or through an increase in the potential labor force due to the increasing participation of women.

b) Immigration-related unemployment: Expansion of the labor force due to net immigration and, as a rule, also the labor supply. If an exogenously caused surplus of supply occurs on the labor market and if the demand for labor does not change, does not change to the same extent or does not change quickly enough, the equilibrium wage must fall so that underemployment can be avoided. However, if wages are sluggish or rigid at the bottom, then with constant demand for labor for a certain period of time or permanently, unemployment will arise exactly to the extent of the expansion of the labor supply.

Basic strategies to fight unemployment

Since unemployment causes individual and social hardship as well as social problems and leads to economic welfare losses, its elimination is an important goal of labor market and employment policy. In general, three strategies for increasing the number of employees or reducing the number of unemployed can be distinguished:

Increase in demand for labor

including the following instruments:

a) Demand-oriented economic policy To stimulate the demand for goods: e.g. by lowering social security contributions and taxes, lowering interest rates on the money and capital markets, increasing government spending.

b) Supply-oriented economic policy: e.g. through improvement of production and investment conditions, market economy renewal and promotion of competition through deregulation and liberalization, including labor and social law (reduction of protection against dismissal, easier approval of fixed-term employment contracts, etc.)

c) Technology policy promoting innovation: e.g. improving international competitiveness through product and process innovations as well as promoting the development of human capital.

d) Shortening and flexibilization of working hours: e.g. shortening of the annual working time with simultaneous extension of the operating hours, reduction of overtime, conversion of full-time to part-time jobs, implementation of partial retirement (smooth transition into retirement) (working time policy).

e) Employment-oriented wage policy: e.g. conclusion of collective wage increases (nominal) below the increase in labor productivity and the target inflation rate of the National Bank, approval of opening clauses in collective agreements, greater wage spread, reduction of the voluntarily paid wage and non-wage costs by companies, creation or expansion of a low-wage sector to generate jobs, above all Person- and household-related service sector (low-wage sector), one-sided (general) nominal wage reductions, in order to bring the economy back to its full employment level (full employment) after an exogenous supply shock via the resulting price reductions and thus implied increases in demand.

Reduction of the labor supply

including the following instruments:

a) Mobility policy: e.g. promotion of regional and occupational mobility through commuter subsidies, subsidies for moving costs and a more modular structure of training courses in order to direct the workforce more or better to those areas in which they are actually needed.

b) Shortening the working life: e.g. early transition to retirement, introduction of long-term vacations (sabbaticals), promotion of career breaks for professional development, for periods of child-rearing or care, extension of school and study periods.

c) Immigration policy: e.g. incentives to stay in the country of origin, repatriation offers and reintegration in the country of origin, selective limitation of immigration, tightening of the asylum law and its implementation (acceleration of procedures, etc.).

Labor market equalization policy

including the following instruments:

a) Advice and job placement: e.g. increasing market transparency through the provision of information, measures to accelerate and qualitatively improve placement success, promotion of competition in and between employment agencies through increased benchmarking and target controlling of regional labor market policy (preparation of integration balances, etc.), evaluation of labor market policy instruments, reinforced Approval of private employment agencies and cooperation between private and public employment agencies, employment agency under the umbrella of the Temporary Employment Act, promotion of international career and employment advice.

b) Use of new search strategies on both sides of the workarctic: e.g. via the Internet, talent marketing, self-marketing, job search contracts, networking, setting up a business, possibly as part-time self-employment, outplacement, personal leasing, crowdwork.

c) Qualification policy: e.g. promotion of general and vocational training as well as professional development with the aim of acquiring key and interface qualifications (key qualifications).

d) Job opportunities: e.g. Realization of structural and environmental policy goals, improvement of placement chances for the long-term unemployed, conversion of unemployment benefits into employment benefits, e.g. via wage subsidies ("Make Work Pay").

e) Wage gap requirement: The wage replacement benefits should be measured in such a way that taking up a reasonable but low-paid job is worthwhile.

Persistence, hysteresis and inflation-stable unemployment: Already relics from bygone times?

The long-term development of unemployment in Germany up to 2005 was due on the one hand to a solidifying base unemployment (Persistence) and, what is even more problematic, one stair-shaped rise the unemployment rate after each business cycle characterized in what Hysteresis reflects. Hysteresis describes the fact that, once unemployment has arisen, after every exogenous shock, when it disappears, it no longer returns to its original endogenous level, but rather swings to a higher, equilibrium level that occurs when the economy is balanced (Path dependency thesis) (see Figure 1).



This development can be justified as follows: If unemployment arises after a supply shock, which is triggered, for example, by an increase in the price of crude oil, the unemployed gradually lose part of the human capital they have built up (human capital theories; labor market theories). These Dequalification the employers also register and use the duration of unemployment as a selection tool by first employing those people who show the shortest period of unemployment (Signaling; Filter theory). This selection in turn demotivates the other job seekers who reduce their search, training, etc. efforts. Thus, once unemployment has arisen, it becomes the cause of further unemployment. This rather sobering realization confirms the importance of combating the problem as early as possible Long-term unemployment not to let it arise.

Since the unemployment rate skyrocketed in the recession phases in the mid-1970s, early 1980s and early 1990s, and there was only a limited drop in unemployment in the subsequent upswing, the level of the unemployment rate rose from recession to recession. Only since Labor market reforms from 2003 (Hartz Laws) it was possible to lower unemployment in the upswing phases below the base of the previous periods. Across Germany, base unemployment fell for the first time in the wake of the positive development in the labor market between 2006 and 2008. This trend of falling macroeconomic base unemployment continues to this day (see Figure 2).

In addition, not only has the number of unemployed decreased significantly since 2005, from 4.86 million to 2.79 million in 2015, but also the number of long-term unemployed, the key indicator of individually solidified unemployment. Their number decreased from 1.76 million to 1.04 million in the same period (see Figure 3).

These overall positive developments should not hide the fact that, on average for 2016, around 37% of all registered unemployed were still unemployed for a year or more (almost 1 million long-term unemployed), in absolute and relative terms, most of them in the legal system of SGB II In the 2010s, the long-term unemployment rate remained fairly stable at this level, despite the overall continuing decline in the number of unemployed. In addition, the short-term increasesTransitional unemployment as a result of increasing fluctuation in the labor market, which includes increasing transitions into and out of unemployment. How this greater flexibility and dynamism on the labor market against the background of the significant increase in atypical employment relationships (atypical employment) at the expense of normal employment relationships ultimately, especially in connection with the Working poor-The problem (poverty in or in spite of work) is to be assessed remains controversial.

Unemployment can basically be combated by expanding demand. The problem with this strategy is that it is often associated with price increases and inflation. The starting point of the considerations is that there must be an unemployment rate that is linked to a constant inflation rate. A Non-Accelerating Inflation Rate of Unemployment (NAIRU) exists when employers and employees choose their entitlements to the distribution of the available national product in such a way that the inflation rate is not affected. The resulting unemployment rate is that which is accepted as full employment in wage negotiations. However, the profit-maximizing companies try higher prices or the employees (representatives) who maximize real wages try higher wages autonomous bigger Expectations In relation to the national income, which can only be distributed once, the inflation rate inevitably increases. If the inflation rate is to remain constant, the unemployment rate must increase so that both sides of the market are sanctioned for their actions or disciplined with regard to their distribution claims: companies have to accept reduced sales, workers underemployment. If the claims are excessive, unemployment must rise in order to reduce the former again. M.a.W .: Unemployment takes on a coordinating role to prevent an inflation spiral.

Is the actual unemployment rate below the NAIRU, this provokes distribution conflicts with the consequence of an accelerating price level; a restrictive monetary and fiscal policy is therefore recommended for this situation. An actual unemployment rate above the NAIRU, on the other hand, indicates that overall economic demand is too low. The margin of distribution that arises from productivity growth and the central bank's target inflation is not exhausted. In this situation - but only then - unemployment could be reduced through expansionary monetary or fiscal policy impulses without an increase in the inflation rate being expected.

The NAIRU need not remain stable over time. In fact, it was still around three percent in western Germany in the early 1970s, but grew to around nine percent by 2007. If there is persistence on the labor market, in the event of an exogenously caused disruption it will take a certain time for unemployment to return to its old equilibrium level, but the NAIRU will not change. If, on the other hand, hysteresis can be assumed, for example through an increase in mismatch unemployment or through higher autonomous claims by one of the two or both labor market parties to the national product, the NAIRU increases and does not fall back to its original level. This reduces the chances of a demand-oriented economic policy to improve the situation.

The Development since the Hartz laws is characterized by an increase in the importance of both supply-oriented economic policy and labor market equalization policy. An essential element of this orientation is the stronger link between state services and individual consideration (principle of support and Demand) on the job offer page. The NAIRU has not left the decline in unemployment paired with wage restraint unaffected. More recent estimates for Germany show that the NAIRU since the introduction of the Labor market reforms has continuously decreased. The unemployment rate is currently below the NAIRU. It can therefore be foreseen that struggles for distribution will follow.

Current developments and outlook

The number of unemployed decreased from 4.9 million in 2005 to 2.7 million in 2016. The unemployment rate fell accordingly from 11.7 percent to 6.1 percent. At the same time, the number of employees subject to social security contributions rose from 26.5 million in mid-2006 to 31.4 million in June 2016, and the number of hours worked also increased. In terms of both the development and the structure of unemployment, however, there are considerable differences between the two legal systems.For example, unemployment in the legal system of SGB III has fallen more sharply in recent years than in the legal system of SGB II (see Figure 4). The same statement can be made for the development of underemployment (without short-time work), which also includes people in labor market policy measures and in short-term incapacity for work.



As a result, the share of SGB II unemployed in relation to all unemployed rose. Less than a third of all registered unemployed are in the legal system of SGB III - however, it is responsible for around two thirds of all unemployed people taking up employment on the primary labor market; The long-term unemployment rate is correspondingly lower. In addition, unemployment in the area of ​​unemployment insurance is far more cyclical than in the area of ​​basic security. While unemployment in SGB III is increasingly characterized by short-term transitional unemployment, the structures in SGB II remain difficult and the average duration is comparatively high.

Two factors in particular increase the risk of (permanent) unemployment in Book II of the Social Code: on the one hand, a lack of professional qualifications on the part of job seekers (feature profiles of job seekers), behind which there are often social, cultural and individual deficits, and on the other hand, the increasing digitalization of the world of work at a rapid pace increasing challenges to the adaptability of the job holder (job requirement profiles). Not least because of this discrepancy that can hardly be bridged, the idea of ​​(unconditional) basic income and the introduction of a robot tax are again being considered. All the more so as the risk of increasing polarization the employment relationships In low and high-skilled jobs at the expense of medium-level qualifications, including skilled workers, which could fundamentally shake the successful model of dual vocational training (dual vocational training) that is widespread in German-speaking countries, but it is definitely a challenge. In addition, there is the spread of non-standardized forms of employment (atypical employment).

A third, current problem is the integration of refugees into the German labor market. Experience has shown that due to a lack of language skills, labor market-relevant skills and formal qualifications, they often need several years to acquire the necessary prerequisites for successful participation in working life and to become employable (employability ). So it is no coincidence that temporary employment agencies most often offer refugees an opportunity to join. Refugees also have the best chances of training or employment in companies with an already high proportion of foreign workers. If immigrants fail to integrate into the labor market and the German labor market's capacity to absorb decreases, the consequence is increasing (long-term) unemployment. This tendency is exacerbated when the immigration of people (groups) in need of intensive human capital investment persists.