Key challenge – labor market

June 2010

First the euro crisis, then the need to implement savings and finally an empty seat in the office of the German President. National politics in Germany currently faces numerous challenges which need to be solved. But where should politicians start? If you ask citizens, the answer is clear: the most urgent challenges that need to be solved are the economy and employment.

As in previous years, the concern about job security tops the list of challenges in Germany. Two thirds of respondents indicated this as the most important task. This represents an increase of 9% on the figure for the crisis year of 2009. These are the partial findings of the Challenges of Europe 2010 survey conducted by the GfK Association. Although thanks to short-time working the rise in the rate of unemployment was more modest than initially feared, many regard the future as too uncertain to breathe a sigh of relief just yet.

The current concerns of Germans can be sub-divided into five major and three minor areas. The largest group relates to the economy and employment. Germans believe that alongside stabilizing the labor market, budget reconstruction, pension fund reforms and changes in the health service should top the to-do list of politicians. Citizens are concerned about their financial security and the prospects for future generations. Youth unemployment, for example, has become a greater concern than it was only a year ago. The concern about an increasing number of people turning to crime has also risen considerably. With no economic prospects, respondents fear that Germany could be facing an increase in crime.

The second major area where Germans are of the opinion that a lot of work is needed involves prices and pricing policy, especially in the energy sector. Although the economy has recently recovered somewhat, people are evidently observing the effects of the crisis with some concern. In 2009, the group of respondents who worried that they would need to spend more money for less accounted for 13%. In 2010, this figure is already up to 24%. This is closely associated with a certain loss of trust in politics. Respondents believe that politicians need to do more to improve their credibility.

Security is another topic people are increasingly focusing on again. Crimes such as the killing of a passenger who intervened when two youths attacked four teenagers at a local railway station in Munich and the cases of abuse in the Catholic Church are very fresh in people’s minds. More than ever, citizens therefore want politics to work towards combating crime and its causes. Compared with the previous year, the number of those who believe that action is required in this respect has almost doubled.

Two other groups of concerns relate to poverty and social equity. A significantly higher number of respondents than one year earlier think that the Hartz IV benefit rates are too low, call for health reforms and dislike current tax policy. Wages are also increasingly perceived as too low and the unfair distribution of income is criticized. It remains to be seen how the government’s planned cutbacks will affect sentiment among citizens. After all, the cuts implemented by the government will additionally affect social benefits.

The three minor groups of concerns among Germans comprise investment and tax reductions, education policy and environmental protection as well as the policy of peace. For Germans, these include combating terrorism and greater political commitment to reducing the threat of war, both of which are probably motivated by the deployment of German soldiers in conflict zones.

Changing challenges

The priority in the eyes of citizens when it comes to the list of concerns largely depends on the political and social situation. For example, unemployment and concern about job security was always at the top of the list of concerns Germans have had in past years, although the urgency varied. At 86%, far more people in Germany worried about the job situation in the country in 1998 than today. This is hardly surprising, given that the rate of unemployment had risen to 12% in the previous year, exceeding the psychological barrier of 4 million unemployed for the first time. In 2006, the majority of respondents (80%) also listed the need to combat unemployment as the most urgent challenge. At the time, more than 4.4 million Germans were out of work.

Changes in the mood are also evident with regard to the trend in prices and purchasing power. In the 1990s, few Germans were worried about this. Today, reports on the weakness of the euro are probably contributing to a decline in citizens’ trust in predictable prices and the fact that this topic has moved up into third place in the ranking of concerns. However, once before in 2002, 14% of respondents were under the impression that they had to spend a lot for very little. It is likely that this was also a reflection of the euro situation at the time. The euro was a new currency and many initially regarded the switch to the euro as associated with a hidden increase in prices.
Overall, people in Germany saw the fewest problems at the start of the new millennium, when respondents only mentioned 1.8 challenges in total. Ten years later, three problems are perceived on average.

Health service: concern is rising

How urgently does our health service need to be reformed? This is a question far fewer people asked themselves in the 1990s than today. In the millennium year, this topic did not even make it into the ranking of concerns and in subsequent years, only 4% to 6% saw any need for action. This changed in 2006 when the discussion about the future of the health service erupted. One of the questions that emerged in view of an ageing society was whether a per capita fee or citizen’s insurance should be introduced. Germans were unsettled and at 15%, the topic moved into third place of the ranking. The discussion led to a health reform, which is now under scrutiny again. History is repeating itself – in this case, this statement applies to both the topic of discussion and the consumer mood. Currently, 21% of the population is concerned about the state of our health service.

Worries about pensions

An ageing society, overburdened social security system and excessive costs resulted in the EU Commission recently proposing a gradual increase in the retirement age to 70 years. This proposal is unlikely to meet with much enthusiasm from the population. From the mid 1990s, old age provision has increasingly become a focus of citizens’ concerns in view of numerous reforms and cuts in benefits. When the Cabinet of the grand coalition then resolved “retirement at 67” at the beginning of 2006 people became increasingly worried about old age provision, with 18% of citizens demanding action from politicians, double the percentage recorded in the mid 1990s. Fears rose when pensioners received no increase in their pension for the third time running in 2006.

The Mehmet case and its consequences

Criminal statistics recorded more than 1.8 million thefts in 1998, a year in which crime was in second place with 19% and at an all-time high. This statistic was probably not so much a result of the actual offences as the spectacular reporting of youth crime in the media. At that time, fear was partly generated by the Mehmet case, a serial youth offender who made headlines. In subsequent years, concern regarding crime decreased again, but is now up once more. 15% of people see a need for action in view of the headlines about the railway beating and tax evasion.

Who will pay for all this?

The front pages of newspapers these days often feature national debt, which is causing a headache for politicians across Europe. German citizens are well aware of the finance summit and required cutbacks, which have resulted in uncertainty, with currently 12% of Germans worrying about the state coffers. The value was at a similarly high level once before in 1998, when 10% of respondents indicated that they thought politics needed to do more with regard to the budget. Previously, national debt had been rising every year in the wake of German reunification. In 1996, it exceeded 60% of GDP. This may have been the reason why Germans became increasingly aware of financial policy.

Environmental protection: the memory of Chernobyl

In the past, people worried about the future of our planet as much as they are concerned about the economy today. Almost 30% of respondents saw urgent need for action on environmental protection in 1990, with only 7% worrying about economic stability. Evidently, four years had not been enough for people to forget the disaster at the Chernobyl nuclear reactor. At the end of the decade in 1989, the oil slick disaster after the Exxon Valdez tanker ran aground off the coast of Alaska caused further concern. At present, concern about the environment is rising again. However, at 10% it is far below the figure recorded in 1990. It remains to be seen how much the current oil spillage in the Gulf of Mexico will impact on concern about the environment.

Immigration is less of a concern

In the early 1990s when the number of asylum seekers rocketed (in 1992, the number of applications totaled 438,000), concern in the population also increased rapidly. More than two thirds of Germans mentioned immigration as a challenge at that time. In recent years, in which the number of applications from asylum seekers has been down to an average of 20,000 per year, concern regarding immigration also diminished substantially and is currently hovering around the low mark of 8%.

Ray of hope on the labor market

In summary, there are plenty of aspects requiring action from the political and economic arena this year, above all the challenge of creating more jobs. However, in this respect at least, the situation seems to be easing. In spring this year, the German labor market recovered and the number of unemployed was down to 3.2 million in May. A new German President must also be elected by the end of June. In light of the large number of current challenges, including reducing national debt and stabilizing the weak euro, observing the ranking of concerns among Germans will remain interesting in the future.

For further information about this survey of the GfK Association, please contact Ronald Frank, GfK Association, tel. +49 911 395-3004 or e-mail: ronald.frank@gfk-verein.org


Data source: GfK Verein (Challenges of Europe 2010, June 2010)
For enquiries please contact Ronald Frank, tel: +49 911 395-3004, email: ronald.frank@gfk-verein.org

For all other enquiries on GfK Compact contact Claudia Gaspar of the GfK Association: claudia.gaspar@gfk-verein.org