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German unemployment hits new post-war record

NUREMBURG: German seasonally adjusted unemployment rose in March for the eighth month in a row to 3.998 million, setting yet another post-war record high, the Federal Labour Office said on Wednesday.

German unemployment climbed 26,000 from the month before with all of the increase coming from west Germany, where jobless numbers rose 27,000 in March.

The number of unemployed in west Germany climbed to 2.776 million in March while the number of jobless in east Germany stood at 1.22 million.

On an unadjusted basis, however, unemployment fell to 4.141 million in March from 4.270 million in February and the unemployment rate declined to 10.8 percent from 11.1 percent.

The number of vacancies climbed to 369,124 in March from 327,350 in February.

Unemployment has surged in recent months, reflecting a slowdown in the economy which led to a fall in gross domestic product in the fourth quarter last year and a likely drop in the first quarter of this year.

High wage deals last year have also left companies unwilling to take on new staff and given them reason to shift production and jobs abroad.

The President of the Federal Labour Office, Bernhard Jagoda, warned that the traditional spring recovery in the non-seasonally adjusted German jobless total was weaker this year than before, causing the rise in the adjusted number.

"There are greater problems than the previous years," he said. "The spring recovery is limited. The recessional developments in the building industry are also having a bad effect, he said."

"Just what effect the extraordinarily cold weather weather in March will have we shall see in the next few months," he added.

The increase in seasonally adjusted unemployment was slightly below economists' forecasts of 30,000 to 50,000.

"The figure was not as high as expected because of the flat result in east Germany. But this does not show that unemployment growth is levelling off," said Timo Klein, economist at MMS International.

"Given that unemployment is a lagging indicator, I expect the adjusted figure to climb into the third quarter, although the unadjusted figure could decline in coming months."

Gerhard Grebe at Bank Julius Baer in Frankfurt said the bad winter had played a role again.

"The problem is deciding how much unemployment is caused by the weather and how much by the economic situation. We will have a clearer picture in April," he said.

"I expect the unadjusted numbers to continue to fall in the coming months and the rise in the seasonally adjusted number to diminish and start to fall in the second half. But the problem is that there will be no strong upswing in the labour market."

Economics Minister Guenter Rexrodt and Labour Minister Norbert Bluem pledged at last week's unemployment summit of G7 industrial nations in Lille to push through sweeping reforms aimed at cutting non-wage labour costs and increasing the flexibility of labour markets.

They rejected a wholesale move to a U.S.-style "hire and fire" society, however, saying Germany's cherished social welfare state would remain in place. The U.S. unemployment rate, at 5.6 percent, is half the German level.-Reuter