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Business

Scandal in Germany's Labor Office

An government internal audit revealed last week that the agency charged with finding people jobs falsified their statistics. The fact could case the agency's head his job.

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Playing with the numbers.

A scandal that has ripped through Germany’s troubled government labor offices might cost one of Germany’s top employment officials his job.

Bernd Jagoda, the president of the Federal Labor office, has come under fire from government officials after an internal audit revealed statistics fraud in at least five of the 181 employment offices he oversees.

The employment offices said they put one out of every two people in jobs. In reality, auditors found they had only place one in every five.

The scandal further muddies an already murky employment picture in Germany. Last week, the number of unemployed went over 4 million. Employment offices are crucial to getting the unemployed off the public dole and back into jobs.

The scandal and high unemployment casts further doubt on Chancellor Gerhard Schröder in an election year. When he assumed office in 1998, Schröder promised to reduce unemployment drastically.

As a result, the chancellor's ruling Social Democratic Party has already begun its politicking. By laying the blame on Jagoda, of the opposition Christian Democrats, attention is taken away from Jagoda's boss, the already embattled Labor Minister, and Schröder appointee, Walter Riester.

Feeling the heat

The pressure on Jagoda was cranked up a notch Saturday morning, when the Federal Labor Office confirmed rumors that Jagoda had known about the practice since 1998. At the time, changes were proposed but only partly carried out, according to a spokesman.

I'm not going

Präsident der Bundesanstalt für Arbeit, Bernhard Jagoda

Bernd Jagoda

Jagoda has refused to resign, asking that he be allowed to clean up his own office.

Christian Democratic leaders have, in part, supported the embattled labor president, demanding Riester's resignation.

"If Riester has any self-respect, he would resign," said Frierich Merz, who had the Christian Democrats parliamentary group, last week.

I'm not going either

But Riester, too, has refused to resign. He has ordered the audits of five more employment offices and gave Jagoda, who oversees 93,000 employees, eight days to come up with some answers.

Few think he will last that long.