Jobless at new high in struggling Germany

Unemployment in Germany hit another post-war high in December, amid signs that the economy is again grinding to a halt after a modest recovery in the second half of last year.

According to figures released by the Federal Labour Office yesterday, unemployment rose by 48,000 last month to a seasonally-adjusted 4.156 million - equal to 10.8 per cent of the workforce. And next month the number of jobless is projected by economists to reach 4.5 million.

Much of the rise is attributed to a down-turn in the construction industry, exacerbated by the extremely cold weather that has been gripping Germany for the past fortnight. Economists have warned that the big freeze could push the overall German growth rate in the first quarter into negative figures, repeating last year's trend.

Even without the weather, the economy is faltering. Provisional figures released yesterday by the National Statistics Office showed last year's growth rate at 1.4 per cent, marginally below forecasts and much lower than the previous year's performance. The office estimates Germany's budget deficit for 1996 was around 3.9 per cent - well above the Maastricht target for European monetary union.

Whether the government can keep its budget deficit within 3 per cent in EMU's qualifying year will depend on the growth rate, which it predicts will be 2.5 per cent this year. That forecast is already off target, however, as it did not anticipate the current slow-down. A larger-than-expected unemployment rate will also place a heavy burden on expenditure, straining the budget beyond the permitted limits.

Earlier this week, the Berlin-based DIW Institute predicted that this year's growth would be around 2 per cent, half a percentage point less than what the government is counting on. And even the joint report of the six leading institutes, which expect the growth rate to be within the government's range, has calculated the budget deficit will still be over 3 per cent.

To qualify for EMU, Chancellor Helmut Kohl must again introduce savage spending cuts, which in turn will further depress domestic consumption. This, however, would make him vulnerable to the charge from political opponents that he was abandoning the jobless to attain a lofty goal that is not shared by his electorate.

Responding to the stream of abysmal figures, Mr Kohl pledged again to strive for jobs, though he had nothing new to offer in the way of a remedy. "Fighting unemployment remains the most important domestic policy challenge," he said. "Current levels of over 4.1 million jobless are completely unacceptable."

The Chancellor said he did not believe that rising unemployment would jeopardise economic recovery this year. "I think the chances for recovery rest on a solid basis," he declared. "I see no reason to adopt a resigned attitude - creating jobs is possible."

Mr Kohl reiterated his government's commitment to overhaul the country's convoluted tax system, details of which are to be announced this month. There is also a pension reform on the way, and cuts in the "solidarity surcharge" - tax earmarked for eastern Germany.

The Chancellor is meanwhile promising another round of talks with unions and employers, which last year produced a pledge to halve unemployment by the year 2000.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore