German unemployment fallsbelow five million in April

28th April 2005, Comments 0 comments

28 April 2005, BERLIN - German unemployment fell to below the five million mark in April for the first time since labour reform rules, introduced earlier this year, swelled the ranks of the unemployed, the Federal Labour Agency (BA) said on Thursday.

28 April 2005

BERLIN - German unemployment fell to below the five million mark in April for the first time since labour reform rules, introduced earlier this year, swelled the ranks of the unemployed, the Federal Labour Agency (BA) said on Thursday.

April's unemployment rate stood at 12 percent, down from 12.5 percent in March, a fall that will certainly help to ease some of the pressure on Chancellor Gerhard Schroeder ahead of a crucial state election next month.

While the labour office said unadjusted joblessness dropped 208,000 to 4,968,000, the more market-sensitive adjusted rate fell by 79,000 to 4.889 million. Analysts had expected the adjusted unemployment figure to rise by 10,000 this month.

Thursday's data comes in the build-up to elections on 22 May in North-Rhine Westphalia, Germany's most populous state, with the modest improvement helping to boost the campaign of Schroeder's Social Democrats (SPD) to hold on to the state.

"The government will be able to score a few points (from the data)," said Adolf Rosenstock, senior economist with Nomura International.

The SPD is facing an uphill battle to continue its grip on North- Rhine Westphalia, which the party has ruled for 39 years.

Besides the humiliation of losing control of their political heartland, defeat for the SPD in North-Rhine Westphalia could also set the stage for a conservative victory at next year's national elections.

Labour office data showed seasonally unadjusted unemployment in April falling in North-Rhine Westphalia for the first time this year with the numbers out of work edging down by 25,800 to 1.06 million. That is, however, 148,000 more than a year ago.

The unemployment rate in the state, which includes one of Germany's historic industrial areas, dropped from 12.4 percent in March to 12.1 percent this month as spring weather helped to increase hirings across the country.

But despite the fall in April unemployment and Schroeder's tough Agenda 2010 economic and labour reforms, companies have continued to cut jobs in Germany with chemical maker Lanxess AG saying earlier this week that it was considering cutting 1,200 jobs and shutting plants.

Other companies have used the threat of shifting operations and jobs out of the country to low cost economies such as Poland or the Czech Republic to force workers to accept extended working hours with Germany's high unemployment rate having helped to dampen consumer spending.

With high oil prices triggering a slow-down in global growth, the country's six leading research institutes this week slashed their economic growth forecast for 2005 in half to a meagre 0.7 percent.

This falls well short of the two percent economists believe is necessary to underpin sustained job creation.

However, Labour and Economics Minister Wolfgang Clement seized on the new jobs data as showing that the government's reforms were having an impact. "The labour market is on the way to improvement," he said.

But opposition labour market spokesman Karl-Josef Laumann hit back saying that the data hid the true state of unemployment.

Schroeder is now hoping that next January's planned cut in corporate tax from 25 percent to 19 percent will further help to shore up the fragile labour market ahead of next year's national election.

The chief of the Nuremberg-based labour office Frank-Juergen Weise said the decline in April was chiefly due to seasonal factors with the improvement in the labour market resulting from the creation of part-time jobs and government 'make work' schemes.

Despite the drop in April, the politically sensitive seasonally unadjusted unemployment figure was still some 525,000 higher than in April 2004.

This follows the January introduction of Schroeder's strict new welfare and labour rules which meant social welfare recipients were added to the list of unemployed for the first time.

The new regulations boosted the ranks of the unemployed by upwards of 700,000 in the first two months, sending the jobless tally to a post-war record high of 5.21 million in February and a rate of 12.8 percent.

One bright spot was the release of official data showing the number of vacancies increasing by 21,000 in April, to record the sixth consecutive monthly increase. The labour office said there are a total of around 800,000 job vacancies across Germany.


Subject: German news

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