Job Market

According to the head of the employment agency, Frank-Juergen Weise, there is still healthy demand for skilled workers in Bavaria, Baden-Wuerttemberg, Saxony and parts of Thuringia -- and that, he said, prevents him from sharing the general pessimism about the current economic development.

If the fiscal crisis doesn't result in a shortage of capital, then there's a good chance that German small and medium-sized companies will have enough orders to prevent job cuts, the employment expert said. But he emphasized that his prognosis was based on the assumption that the crisis won't extend beyond 18 months.

Weise also expressed hope that the number of unemployed youth could be held in check thanks in part to initiatives encouraging young people to get their secondary school diplomas. He said that while overall, 2009 might not see a reduction in unemployment, the situation probably wouldn't get any worse.

Workers to feel impact in their wallets

The Rhineland-Westphalia Institute for Economic Research (RWI), however, was more cautious in its assessment of what 2009 has in store. Experts there are predicting a recession-related increase in the number of unemployed of almost 600,000. RWI President Christoph Schmidt said that workers would feel the impact of worsening conditions on the labor market in their wallets next year. He said companies would only manage to avoid job cuts if they are able to reduce operating costs elsewhere.

Many of Germany's top companies have offered job guarantees in 2009 -- a move that creates confidence, said Juergen Thumann, the president of the Federation of German Industry (BDI). But this still doesn't address a key aspect of Germany's persistent unemployment problem -- the high rate of long-term unemployment.

To combat this problem, Federal Employment Agency head Weise says the government must continue to focus on education. Some 62 percent of people who've gone longer than a year without work either have no diploma, or a general education certificate from a Hauptschule -- the lowest-ranked form of secondary school in Germany's three-tier education system.

Weise says that the current focus and investment in youth employment is reflected in the fact that people under the age of 25 now make up only 2 percent of long-term unemployed.

"The state has invested a tremendous amount," he said.

In November 2008, some 965,000 people had been jobless for over a year. That was 20 percent less than in 2007, but still a high 36 percent of all unemployed, he said.