Rise in jobless another blow for Schröder
By Kate Connolly in Berlin
(Filed: 06/02/2003)
Chancellor Gerhard Schröder was dealt another blow yesterday when German unemployment shot up by almost 10 per cent in the biggest monthly increase for five years.
Nearly 400,000 Germans lost their jobs in January, taking the total to 4.6 million, or one in nine of the entire workforce.
Gerhard Schröder: hoping reforms will save the economy
The rise for the same period last year was 250,000 and the previous year 280,000.
Wolfgang Clement, the economics and labour minister, yesterday admitted the seriousness of the figures, saying they were a reflection of the country's "grave structural problems".
Opinion polls showed that Germans have spectacularly lost faith in the ability of Mr Schröder, who suffered a humiliating defeat in regional elections this week.
There is a higher than average monthly rise in unemployment every January because temporary workers taken on for the Christmas holiday season are dismissed at the end of the year.
But this year's rise was mainly attributed to a sluggish economy which is causing consumers to buy less and employers to lay off workers.
The figures were met with virtual silence from government quarters, and the head of the Federal Employment Office, Florian Gerster, sought to play down their significance.
"Not only do the indices lack clarity and consistency so far, but there is usually a time-lag between general economic developments and the labour markets anyway," he said, predicting that the figures would improve once the government's reform policies started to take effect.
Germany's economy is in its gloomiest state for several years, with a low growth rate bringing it close to recession and unemployment.
The government is accused of mismanagement by failing to introduce reform, while at the same time tax rises have angered voters and cut consumer spending. It has proposed a number of changes in the labour market, such as increasing the efficiency of job centres and introducing low-paid jobs.
But reformists widely agree that the proposals do not go nearly far enough to have a significant effect on the economy.
Mr Schröder faces opposition from traditionalists within the ranks of his own Social Democrats and from the trade unions, which have accused him of undermining the German welfare state, considered one of the most comprehensive in Europe, and increasing job insecurity.
Analysts say that unless Germany slims down its welfare system, reduces its extremely high non-wage labour costs and deregulates its rigid labour market, the economy has no hope of recovery.
Germans' belief that Mr Schröder is not necessarily the man to steer the country out of its crisis was reflected in a survey published today by opinion pollsters Forsa, in which 69 per cent said the chancellor's ability to run the country was "minimal".
In the same survey the popularity of the ruling Social Democrats was shown to have sunk to 27 per cent while that of the opposition Christian Democrats was 49 per cent.
