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German jobless hits 4-year high
NUREMBERG, Germany (CNN) -- German unemployment rose to a four-year high in November, surging past the politically sensitive four million mark. The Federal Labour Office said on Wednesday the number of people out of work rose by 96,100 to a seasonally unadjusted 4.02 million. The jobless rate rose to 9.7 percent from 9.4 percent in October. November's seasonally adjusted figure rose by 35,000 to 4.16 million, while economists at Bear Stearns were expecting the number to rise by about 20,000. Also adjusted for seasonal factors, the jobless rate rose to 10 percent from 9.9 percent in October, Bundesbank data showed. But many economists believe the jobless total will pass 4.5 million this winter -- further undermining the credibility of newly elected Chancellor Gerhard Schroeder.
The European Central Bank is expected to trim interest rates on Thursday as Europe's biggest economy struggles to grow. (Full story) German business confidence has fallen for the sixth consecutive month and many economists argue sluggish growth is unlikely to halt the rise in unemployment until the second half of 2003. "At the start of 2003 we will certainly see a rise in non-seasonally adjusted unemployment to over 4.5 million as a result of the usual winter effects,'' Ralph Solveen of Commerzbank told Reuters. Unemployment typically rises during cold weather as temporary construction and agriculture jobs dry up. Florian Gerster, president of the Labour Office, said the economy remained too weak to revive the jobs market. The country's BDB private banking association cut Germany's economic growth forecast to 0.3 percent from its previous estimate of 0.5 percent after the unemployment numbers were released. The government is forecasting a rise of German gross domestic product of 1.5 percent in 2003, while the BDB believes it would be closer to 1 percent next year, and called on the ECB to cut interest rates by 0.5 percentage points. During November, German trucks and engineering group MAN said it would slash 1,000 of its 76,000 jobs next year, while Commerzbank said it might axe 3,000 jobs next year on top of the 4,300 already announced. DaimlerChrysler announced plans to cut 800 cable-making jobs at a German plant and a shift to cheaper eastern European labour. And many economist say Schroeder's planned tax hikes have already had an impact on November's jobs and many companies have decided not to recruit any new workers. But Germany's room to manoeuvre to boost the economy is limited by its budgetary problems. The European Union has censured Germany for its swelling deficit which Germany predicts will rise to 3.75 percent of GDP in 2002, well above the three percent ceiling allowed by euro zone rules. Reuters contributed to this report.
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