German Unemployment at Record High

The number of people looking for work in Germany, the biggest eurozone economy, rose to its highest level in seven years as the bad weather and sluggish growth caused unemployment to swell at the end of last year, official data showed Tuesday. The Bundesbank calculated that the seasonally adjusted jobless total rose by 17,000 to 4.483 million -- or 10.8 percent of the workforce -- last month, the highest level since Dec. 1997. The annual average jobless total for 2004 rose by 4,300 to 4.381 million, 10.5 percent of the working population. Analysts predict the unadjusted jobless total could rise to five million in the next months, partially owing to new labor market reforms starting Jan. 1. Under the controversial "Hartz IV" reforms, the current two-tier system of unemployment benefits and welfare support for the long-term unemployed is being replaced with a single flat-rate payout, which means that a larger number of people will be classified as looking for work. "That means that the number of job-seekers will rise in the January statistics," Economics and Labor Minister Wolfgang Clement said Monday. "But it is important to stress that there won't actually be more people without a job than before. This is purely a statistical effect. During the course of the year, I expect the jobless total to begin to fall gradually."