German economic pickupfails to impact on hiring

5th October 2004, Comments 0 comments

5 October 2004 , BERLIN - Signs of an economic pickup in Germany have so far failed to make a much-needed impact on hiring, with data released Tuesday showing unemployment in Europe's biggest economy stuck at more than 10 percent in September. While the jobless rate slipped from 10.5 percent in August to 10.3 percent last month, in seasonally adjusted terms the numbers out of work jumped by 27,000 in September with unemployment having risen by 177,000 since the start of the year. This was more than double

5 October 2004

BERLIN - Signs of an economic pickup in Germany have so far failed to make a much-needed impact on hiring, with data released Tuesday showing unemployment in Europe's biggest economy stuck at more than 10 percent in September.

While the jobless rate slipped from 10.5 percent in August to 10.3 percent last month, in seasonally adjusted terms the numbers out of work jumped by 27,000 in September with unemployment having risen by 177,000 since the start of the year.

This was more than double the 10,000 increase that economists had forecast for the month and came despite reforms launched by Chancellor Gerhard Schroeder's Social Democrat-led government aimed at increasing labour market flexibility and forcing people back into the workforce.

"The economic development in Germany is still positive, but the labour market is showing no sign of improvement," Labour Office chief Frank Juergen Weise said in releasing the payroll data.

"The economic recovery is not strong enough and confidence not yet firm enough to lead to a net reduction in unemployment," he said. The September increase represented the eighth consecutive monthly rise in seasonally adjusted unemployment.

Indeed, German economic growth this year is expected to fall short of the 2 percent that most analysts believe is necessary to create jobs. The build up to the release of the latest unemployment data was accompanied by threats of further big layoffs by corporate Germany as they attempt to wind back costs.

While sections of Germany's key car industry have been considering boosting jobs, this has not been enough to offset other planned job cuts. The nation's unions are locked in tough talks with the country's rail service Deutsche Bahn AG, retailer Karstadt and carmaker Volkswagen AG over proposals to large reduce their workforces.

This comes after a wave of German companies shifted production to low-cost sites in Central Europe and in parts of Asia, notably China.

Germany's high unemployment has also hit consumer confidence and retail sales in the country. Sluggish domestic demand has acted as a brake on the nation's economic upswing.

Although Germany's headline unadjusted jobless number dropped by 89,900 to 4.257 million in September, this was 48,900 higher than in September last year.

While the jobless rate in west Germany came in at 8.2 percent in September, unemployment in the country's economically hard-pressed east was more than double that at 18 percent.

The labour office put the drop in unadjusted data down to the traditional autumn pickup in the labour market. Companies were taking on more people as students returned to school. Most economists did not expect a significant turnaround in German unemployment until into the new year.

"Although we are not yet seeing an improvement, at least labour market conditions seem to have stabilized," said Annemarie Christian, European economist with Morgan Stanley.

Analysts also were concerned that the government's reforms will result in a large number of people who are at present claiming social security attempting to find work - and ballooning official jobs data by between 300,000 to 400,000 early next year.

DPA

Subject: German news 
 

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