German jobless figures worse than expected
By Haig Simonian in Berlin
Published: May 7 2003 10:54 | Last Updated: May 7 2003 10:54
German unemployment adjusted for seasonal factors rose by 44,000 to 4.46m last month, reflecting the continuing low growth and structural problems facing Europe's biggest economy.
The rise, taking unemployment to 10.7 per cent of the workforce, was slightly above analysts' expectations, but appreciably smaller than in the first three months of this year.
However, the increase remained well above the average monthly rises of 2002, prompting pessimistic forecasts for the future.
The unadjusted figure, more closely watched in Germany, fell by almost 113,000 to 4.5m. However, the decline, caused by seasonal factors, was smaller than in previous years, leaving last month's figure the highest April unemployment level since reunification.
Economists predicted further deterioration this year because of the near stagnant economy, with matters potentially worsened by the recent sharp rise in the euro. Some fear unadjusted unemployment could reach 5m by the winter.
"The labour market cannot recover on account of structural problems and economic stagnation", said the federal labour agency.
Analysts added that the likely rise in average annual unemployment would play havoc with the government's budget for this year.
Rather than avoiding the need to top up the unemployment insurance scheme, as assumed in the 2003 budget, the federal labour agency, which runs the system, said it already had a €3.65bn deficit at the end of the first quarter. Officials believe the government may have to inject up to €7bn this year in a move that will seriously undermine the budget calculations.
Government officials said the latest unemployment figures highlighted the urgency of reforms needed to reduce cripplingly high non wage labour costs and improve German competitiveness.
However, plans by chancellor Gerhard Schröder to cut unemployment benefit and loosen job protection laws remain controversial, with stiff opposition from leftwingers in his Social Democratic party and the trade union movement.
Michael Sommer, head of the powerful DGB trade union federation, and one of the chancellor's staunchest critics, has called for tax cuts to be brought forward to boost demand.
news.ft.com |
