London. 08:18 GMT March 1, 2005
German unemployment at its highest since 1930s
By Bertrand Benoit andBirgit Marschall in Berlin
Published: February 28 2005 21:55 | Last updated: February 28 2005 21:55
German unemployment shot up to 5.2m last month, its highest level in 73 years, dragging Europe's largest economy deeper into its most serious political crisis in months.
The statistics, to be released on Tuesday, have been obtained by Financial Times Deutschland, the FT's sister newspaper in Germany. They will increase public pressure on the government to reconsider the wait-and-see attitude it has adopted on economic reforms since the beginning of the year.
Analysts have blamed rising unemployment for the electoral setback suffered by Chancellor Gerhard Schröder's Social Democratic party at a regional election a week ago. The debacle brought an abrupt end to a rebound in popularity the SPD had experienced since last summer.
Concern is now rising in the party that Berlin's apparent failure to tackle endemic unemployment could earn the SPD another electoral setback in North Rhine-Westphalia. Germany's most populous state, and an SPD stronghold, goes to the polls on May 22.
The country's stubbornly weak economic growth the failure of companies to hire and invest despite healthy profits and competitiveness gains, and consumers' reluctance to spend has left economists perplexed.
Feeble growth has also prompted calls for corrective measures ranging from a corporate tax reform to a more Keynesian, demand-friendly fiscal policy all of which have been rejected by the government.
Yet economists warned against drawing hasty conclusions from the raw jobless statistics, saying they were heavily distorted by seasonal fluctuations. Anne-Marieke Christian, European economist at Morgan Stanley in London, said: “The unemployment statistics have been more or less meaningless for about a year. Much more interesting will be the employment statistics.”
Alongside its regular statistics, the Federal Labour Office will today for the first time publish unemployment figures under the International Labour Organisation standard. These should be lower than the headline figures and allow for better international comparisons.
At the same time, the Federal Statistical Office will release job creation statistics for January. These are expected to show a further rise in employment, albeit one concentrated in low-paid, part-time or subsidised positions.
Ms Christian said: “The real turning point that we need to see is a rise in the number of full-time jobs, not just in the part-time or subsidised jobs that have been put in place by recent labour market reforms.” The figure of 5.2m job-seekers marks a rise of 179,000 from January. Of this increase, 130,000 was down to Hartz IV, the government's labour market reform, which extended the number of welfare recipients accounted for in the jobless figures.