German unemployment rises to 12.2 per cent

28th February 2006, Comments 0 comments

28 February 2006, BERLIN - German unemployment rose to 12.2 per cent in February, Federal Labour Agency said Tuesday, sending a reminder to Chancellor Angela Merkel's government of the continuing fragile state of the country's labour market.

28 February 2006

BERLIN - German unemployment rose to 12.2 per cent in February, Federal Labour Agency said Tuesday, sending a reminder to Chancellor Angela Merkel's government of the continuing fragile state of the country's labour market.

The rise in the jobless rate from 12.1 per cent in January followed a seasonally unadjusted increase in February of 36,000, which pushed the numbers out of work in Europe's biggest economy up to 5.048 million.

The latest data means that unemployment has remained above the politically sensitive five million mark for two consecutive months. Unemployment rose by about 408,000 to 5.012 million in January.

The release of the latest unemployment data comes as Merkel's Christian Democrat-Social Democrat grand coalition marks its first 100 days in office with many economists having criticised Berlin for failing to press on with much-needed economic reforms, including labour market reforms.

However, Federal Labour Agency chief Frank-Juergen Weise said that the normal seasonal rise in unemployment did not alter the optimistic assessment of the current job market situation. "Unemployment has been tending downwards for months," he said.

The numbers out of work this month represents a fall of 241,000 compared to February 2005 with the cold winter weather hitting industries such as the building and service sectors and consequently helping to boost the jobless queues over the last four weeks.

But economists are more cautious about the jobs outlook with Matthias Rubisch, economist with Commerzbank AG, expecting the labour market only to stabilise in the coming months despite this year's projected pick up in German economic growth.

In seasonally adjusted terms, which economists consider to be a more important indicator of labour market trends, unemployment dropped by 5,000 this month to 4.695 million. But the monthly decline was less than the 20,000 fall analysts had forecast.

Indeed, underscoring the continuing problems facing the German labour market, the release of the February data coincided with the announcement of a deal between a union and the Swedish-based Electrolux group to close its AEG consumer electronics plant in southern Germany with the loss of 1,700 jobs.

The plan is for the factory's production to be shifted to Central Europe, where labour costs are considering lower than Germany.

This followed an agreement reached earlier this month between unions and by tyre-maker Continental AG to cut 10 per cent of the workforce at a plant in the northern German city of Hanover as part of moves by the company to low-cost production sites.

Also since the release of the January jobless data, giant car maker Volkswagen AG said it was considering slashing up to 20,000 jobs in a bid to trim labour costs.

Responding to the latest unemployment data, German Labour Minister Franz Muentefering called on German industry to create jobs, saying there must be "more jobs in Germany."

A senior member of the opposition Free Democrat Party Rainer Bruederle was also somewhat downbeat saying that a turning point in the labour market was "still a long way off. "

The numbers out of work fell by 10,000 in seasonally adjusted terms in the more economically important western half of the country. However, in the east seasonally-adjusted figures rose by 5,000.

While unemployment stood at 10.2 per cent in the west, it was almost double that in the hard-pressed eastern part of the country coming in at 19.5 per cent.

Equally worrying was a fall in employment since the start of the year.

Data released by the Federal Statistics Office also on Tuesday showed the numbers in employment in seasonally adjusted terms falling by 50,000 month-on-month in January.

This represented a fall of 0.4 per cent or 146,000 in the numbers employed compared to January 2004.

DPA

Subject: German news

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