German Jobless Rate Dips in June | Business| Economy and finance news from a German perspective | DW | 07.07.2004
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German Jobless Rate Dips in June

Germany's unemployment rate decreased slightly in June, though analysts say the numbers are deceptive because unemployed people on training programs no longer count towards the country's overall jobless figures.


Critics say the new figures don't represent a real decrease in unemployment

German unemployment fell by one-tenth of a percentage point in June from May's 10.3 percent, the Federal Labor Office said. Just over 4.2 million people were registered jobless -- 60,000 less than in the previous month, and 25,300 less compared with a year ago.

However, experts say the slight decrease is misleading because the number of participants taking part in training schemes no longer count towards the number of unemployed. If the labor office still had to include people in training, the number of unemployed in June would have increased by almost 62,000 over the previous year.

"Despite the souped-up labor market statistics, in the post-war period, there have never been so many unemployed people in the month of June as in this year," said the Christian Democratic Union's labor market expert, Karl-Josef Laumann.

First decrease since January

The June figures represent the first decrease in Germany's unemployment rate since January. Economics and Labor Minister Wolfgang Clement welcomed the statistics, saying they showed that "the trend of job loss seems to be over," but that "a trend toward creating jobs will come only at the beginning of 2005."

"Economic growth is not yet strong enough for companies to generally start hiring more staff," said Federal Labor Office head, Frank Weise, though he added that the implementation of new labor market reforms was keeping increases in unemployment rates in check.

Positive growth predicted

If the prognosis of one of Germany's top economic research institutes is anything to go by, the country now has reason to hope that its fledgling economic recovery will pick up speed.

On Tuesday, the German Institute for Economic Research (DIW) in Berlin predicted that the German economy would expand by more than 2 percent next year -- revising upwards by half a percentage point its earlier prediction of a 1.5 percent growth rate in 2005.

However, the institute said that the additional growth wouldn't significantly cut the high unemployment rate.

In a statement, the DIW warned that the upswing was mostly the result of increased foreign demand for German products, while consumer demand at home "is still weak and will likely revive only in the later part of the forecast period of 2005."

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