Recession keeps German spring at bay

1st May 2009, Comments 0 comments

The usual springtime fillip to the jobs market has failed to materialise in Germany, with less than 1,000 people getting new work in April.

Berlin -- Government figures out Thursday showed Germany's worst postwar recession putting more and more people out of work in Europe's biggest economy, as the clock ticks down to September elections.

Adding to Chancellor Angela Merkel's woes, labour office numbers revealed that the usual springtime fillip to the jobs market had failed to materialise, with less than 1,000 people getting new work in April.

The unadjusted total of people out of work in the world's number one exporter stood at 3.58 million, up 170,000 from April 2008, with the unemployment rate unchanged at 8.6 percent of the workforce.

Seasonally adjusted, there was a worse-than-expected rise of 58,000 that "confirms that the recession is now taking a very heavy toll on the previously resilient labour market," Capital Economics’ Jennifer McKeown said.

Since the downturn began in October, unemployment has risen by 289,000 -- already twice the rise observed during the same time period in past major recessions, UniCredit economist Alexander Koch said.

"Even the warmest April since the beginning of weather records 120 years ago didn't help to achieve a mentionable spring recovery," Koch said, calling the labour market outlook "truly negative."

Germany has already launched two stimulus packages worth a combined 80 billion euros (105 billion dollars) but its efforts are failing to increase demand abroad for its all-important exports.

On Tuesday the government predicted that gross domestic product (GDP) would contract by six percent in 2009, making it one of the worst performing major economies worldwide.

A government source told AFP on Thursday that the recession will result in 2009 in an explosion in Germany's budget deficit to 80 billion euros -- more than twice the previous record set in 1996.

So far, a state scheme subsidising firms to cut working hours -- an extension was announced Wednesday -- has kept a lid on unemployment but experts predict that the steady trickle of recent months will soon become a flood.

"Clearly, the government's initially successful incentives... have become less effective as the recession has deepened," Capital Economics’ McKeown said.

This is expected to be a major issue in campaigning for elections on September 27, when the conservative Merkel is running for a second term, and there have been a warnings that there is even a danger of social unrest.

The head of the DGB trade union federation has said that workers and unions would take mass layoffs as a “declaration of war”, and a left-winger running for president has also raised the prospect of trouble ahead.

Oskar Lafontaine, the leader of Germany's far-left Die Linke party, which is aiming to tap into public anger in September's election, went further, calling on German workers to copy their French comrades and kidnap their bosses.

For the most part, such comments have been the exception and most experts see the risk of social unrest as low. And publicly at least, the government agrees.

Heiner Ganssmann from Berlin's Free University told AFP he thinks that, unlike in France, the rise in joblessness is more likely to be accompanied by "resignation and apathy" than militant action.

Friday will give a first taster of whether such predictions are right, with the financial crisis expected to result in an increase in numbers on the streets for the traditionally riotous May 1 protests in German cities.

Simon Sturdee/AFP/Expatica

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