Fragile labour market keepsup pressure on Schroeder

31st May 2005, Comments 0 comments

31 May 2005, NUREMBERG - With a countdown to early elections in Germany now under way, figures released on Tuesday by the labour agency showed the nation's unemployment rate slipping back to 11.6 percent in May from 12 percent for April.

31 May 2005

NUREMBERG - With a countdown to early elections in Germany now under way, figures released on Tuesday by the labour agency showed the nation's unemployment rate slipping back to 11.6 percent in May from 12 percent for April.

But while unemployment fell in seasonally-unadjusted terms by 161,000 in May to 4,806,589, the numbers out of work in the adjusted data, which points to underlying market trends, showed joblessness in the country remaining stuck at 4.886 million.

This followed an 11,000 rise in joblessness in the western part of the country, which was essentially cancelled out by a 11,000 fall in the former communist east.

Economists had predicted a fall of 20,000 in the seasonally-adjusted numbers out of work. The latest unemployment data is unlikely to help boost the political fortunes of Chancellor Gerhard Schroeder as he heads into the fresh elections, which are likely to be held in September.

Despite Germany chalking up a solid one percent growth rate in the first quarter, labour agency chief Frank-Juergen Weise said that neither the economy nor other special effects "played any notable role in boosting the labour market."

Weise put down any signs of improvement in the labour market in May to seasonal factors. German unemployment peaked in February at an unadjusted 5.216 million or 12.6 percent of the workforce.

Announcing on Tuesday a new make work scheme to create about 30,000 jobs for older long-term unemployed, Economics and Labour Minister Wolfgang Clement seized on figures showing a big fall in youth unemployment as a sign that the government was successfully addressing Germany's chronic joblessness.

Labour agency data showed youth unemployment falling from 610,540 in April to 568,427 in May.

Employment also rose by 14,000 in April, according to the latest official figures, boosted by Berlin's effort to underpin low-wage part-time jobs. Vacancies also increased for the eighth consecutive month in May.

But the opposition was unimpressed, with Dirk Niebel, the secretary general of the liberal Free Democrats, saying what was needed was "a political change to a growth-oriented economic policy."

Schroeder has staked his chancellorship on securing a turnaround in the nation's fragile labour market with the May unemployment data coming in the wake of his dramatic announcement last week that he wanted to hold early elections.

But six months after Schroeder's Social Democrat-led government launched a tough round of welfare and labour reforms, the job market is still showing little sign of a fundamental improvement with both the government and economists saying the reforms will take time before they feed through to the unemployment data.

The May jobless figure was 513,400 higher than in May 2004, with about 360,000 of those now registered as unemployed because of the January changes to Germany's welfare and labour rules, which meant social welfare recipients were added to the joblessness rolls.

But economists are not predicting any substantial pickup in the nation's economy or the labour market between now and the election with opinion polls pointing to voters wanting political change in the country and defeat for the Schroeder coalition.

Moreover, high unemployment is undercutting consumer spending in Germany, dampening growth and leaving exports as the key driving force behind economic expansion.

German growth this year is projected to come in at just over 1 percent, which falls short of the 2 percent growth rate that analysts believe is necessary to create jobs.

Added to this, German companies have been shifting jobs and production out of the country to low-cost high-skilled nations, notably in Central and Eastern Europe.

The release of the unemployment data also comes just 24 hours after the conservative opposition selected Angela Merkel as its standard bearer to challenge Schroeder in the September election. She has also promised to put job creation at the centre of her campaign to become Germany's first woman chancellor.

DPA

Subject: German news

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