February 01, 2022
India is facing widespread unemployment; The minimum wage in Germany will be raised to €12 per hour
Today’s global news summary brings news from India, Germany, and the UK and discusses issues as diverse as unemployment due to Covid-19, minimum wages, and shortages of skilled workers.
- India: India is facing record levels of unemployment as a result of Covid-19
- Germany: The minimum wage in Germany will be raised to €12 per hour
- U.K.: The U.K. is facing a shortage of skilled workers
India is facing record levels of unemployment as a result of Covid-19
Program evaluation | Development
As disclosed by Deutsche Welle, millions of people in India are affected by widespread unemployment and rising levels of inflation. Economists are reporting that the rising costs of living, job losses and inflation are the biggest contributing factors to the country’s crisis. According to statistics from the Centre for Monitoring Indian Economy (CMIE), the unemployment rate in India went up to almost 8% in December, which is the equivalent of 35 million people being unemployed. “Tackling unemployment is the predominant concern in India right now. This is a humanitarian crisis and I argue that the government should be the employer of last resort in such an emergency. Strengthening employment both in rural and urban India is vital,” Lekha Chakraborty, professor at the National Institute of Public Finance and Policy, said. The 2022 World Inequality Report also highlighted India as one of the the most unequal countries in the world with rising poverty.
“According to the most recent estimates of the World Bank, the pandemic has forced 100 million people back into poverty, erasing all the gains in poverty alleviation made in the last five to six years. However, in contrast to the scale and depth of the Covid-19 induced economic shock, the extent of social support provided in many developing countries has been inadequate,” says Shyamal Chowdhury. Read his opinion piece.
Related content
IZA World of Labor articles
Microfinance and rural non-farm employment in developing countries
Key topics
Covid-19—Pandemics and the labor market
National responses to Covid-19
Opinions
Microfinance and rural non-farm employment in developing countries during the Covid-19 crisis
Pandemics and the prospects for higher education in developing countries
How to support the self-employed in developing countries
The minimum wage in Germany will be raised to €12 per hour
Labor markets and institutions
According to France24, six million workers in Germany will benefit from a proposed minimum wage rise to €12 per hour. The increase is promised by Germany’s new Chancellor – Olaf Scholz. Whilst the proposed change is welcomed by workers, many employers and businesses are worried about how this would work amidst rising levels of inflation. One example is the Plentz bakery in Oberkrämer: whilst baker Michael Trützschler says that “as a professional, [he is] happy to be paid decently”, the bakery’s owner is in two-minds about the change. “In Germany, one bakery is closing every day. We are suffering from the coronavirus restrictions, the price of energy and raw materials is rising, and now a 20 percent increase in salaries,” Karl-Dietmar Plentz, owner of the bakery comments.
IZA World of Labor author David Neumark has found that “minimum wages may help policymakers address public demands to combat rising inequality.” Read his full article.
Related content
IZA World of Labor articles
Employment effects of minimum wages
Key topics
What are the effects of minimum wages?
Opinions
Minimum wages hurt young people
IZA Discussion Papers
Did the Minimum Wage Reduce the Gender Wage Gap in Germany?
The U.K. is facing a shortage of skilled workers
Behavioral and personnel economics | Labor markets and institutions
As reported by The BBC, the U.K. government has “announced plans to get 500,000 jobseekers into jobs by the end of June, with those claiming Universal Credit having to look for jobs outside their chosen field more quickly or face sanctions.” Tony Wilson, director of the Institute for Employment Studies, believes that the U.K. labor market has shrunk due to the Covid-19 pandemic. Data from the Office for National Statistics (ONS) shows that there are 400,000 more people who are classified as not looking for jobs and not available to work compared to pre-Covid-19 times. “We have not seen falls like we've seen in unemployment, and this is particularly the case for those over 50,” Darren Morgan, director of economic statistics at the ONS, said. Whilst this number includes people who have chosen to retire early, many others have been forced to join these numbers.
“There is overwhelming evidence that unemployment takes a heavy toll on life satisfaction,” says Rainer Winkelmann. He adds that: “Getting unemployed people back to work can do more for their happiness than compensating them for doing nothing.”
Related content
IZA World of Labor articles
Unemployment and happiness
Key topics
Covid-19—Pandemics and the labor market
National responses to Covid-19
Opinions
Measuring employment and unemployment—Primer and predictions
Videos
IZA World of Labor Panel discussion on inequality, unemployment, wage setting and inflation
IZA Discussion Papers
Did Pandemic Unemployment Benefits Reduce Employment? Evidence from Early State-Level Expirations in June 2021