Friday, May 29, 2020

“We also have to create new jobs”

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Enzo Weber

The professor heads the research area forecasting and macroeconomic analysis at the Institute for Labor Market and Vocational Research (IAB).

(Photo: picture alliance / IAB / dpa)

Enzo Weber is head of the research area forecasting and macroeconomic analysis at the Institute for Employment Research (IAB), the think tank of the Federal Employment Agency (BA). The professor also holds the chair for empirical economic research, in particular macroeconometry and the labor market, at the University of Regensburg.

Mr. Weber, everyone is talking about short-time work and layoffs, and you suggest that the state should pay social security contributions for new jobs by the end of the year. How does that fit together?
The government is currently doing everything it can to save existing jobs – with short-time work, help for small business owners and more. That is absolutely correct. But we also have to ensure that new jobs are created. Even so that those who are now losing their jobs in the crisis do not remain unemployed for long. The labor market collapses not only when workers are laid off, but also when there are no new hires.

Why do you start with your proposal for social contributions?
In contrast to a reduction in wage tax, which is progressive, jobs with a rather low income are also effectively promoted. The model is much more targeted and effective than simply increasing government spending after the end of the corona crisis to stimulate the economy. The federal government should reimburse social security for the loss of income.

The state is already spending unimaginable sums. How much would it cost to promote new jobs?
According to our calculations, if the state pays social security contributions for new jobs that have been in existence for at least six months for a period from May to the end of December, this would cost just under twelve billion euros. But they are very well laid out.

Who thinks of new jobs in the crisis?
Most of the economy is working and the shutdown won’t last forever. And who – according to this logic – should have stopped in the world financial crisis? But millions of new jobs were still created in the 2009 recession year.

More: Read here what the corona crisis means for the labor market in Germany.

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