German Unemployment Figures on the Rise

Thursday's news from Germany's Federal Labor Office was far from pleasant for the German government. Labor Office President Bernhard Jagoda announced the latest unemployment figures for the country: in November, the jobless rate was at 9.5 % in Germany. Some 3.789 million Germans were without a job - 17,000 more than in October.

Jagoda fears unemployment will exceed four million during the winter. That would cause a major headache for German chancellor Gerhard Schröder. He had made cutting unemployment to 3.5 million the focus of his government policy.

Further job cuts ahead

Jagoda's prediction for the upcoming months is founded on recent economic data showing that growth in Germany is slowing. Last month, statistics showed that GDP shrank 0.1 % in the third quarter of 2001 against the second quarter.

Some blue-chip companies like BASF, Siemens, Bayer and Deutsche Bank have already announced massive job cuts. Germany's Lufthansa airline recently had to introduce a radical short-time working plan for its 12,000 flight attendants to prevent lay-offs.

Opposition: "Wake up, Mister Schröder."

Germany's main opposition party, the conservative Christian Democratic Party, has been quick to attack Schröder's record on the economy. The party's general secretary Laurenz Meyer urged the government to "improve the conditions for firms and make it easier to hire people."

Employers in Germany sometimes shy away from hiring new people because of the country's strict labor laws. Once a company hires a person, these laws make it difficult to fire him or her. In addition, businesses have to pay high amounts into Germany's social security and health insurance system for each employee.

Chancellor Schröder has already ruled out making the job market more flexible. He says making it easier for companies to fire people would increase insecurity.

Analysts not pessimistic

Most analysts, however, aren't alarmed by Germany's November jobless figures. Manuela Preuschl of Deutsche Bank told Reuters "The November seasonally adjusted figure was much better than we expected."

Preuschl sees a slowdown in the rise of unemployment. However she does not think this marks the start of a turnaround for the German economy. "I think we won't see any real improvement until the end of next year or even the start of 2003," Preuschl says.