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Thursday, February 26, 2009

German Unemployment Rises Again In February

German unemployment rose again in February but new government job protection measures appeared to be paying off, as the increase was lower than predictetd by economists. Data released from the Federal Labour Agency on Thursday showed that the jobless total increased by 40,000 jobs in February (to 3.31 million), on a seasonally adjusted basis, pushing the adjusted unemployment rate from 7.8 per cent to 7.9 per cent, marking an acceleration of the deterioration in labour market conditions since December.

As reported by the Federal Statistical Office (Destatis) on the basis of first calculations, the number of persons in employment whose place of residence was in Germanyamounted to 39.83 million in January 2009. Hence, the number of persons in employment fell below the 40 million threshold again for the first time since March 2008. In January 2009, employment exceeded the level of the same month a year earlier by 107 000 persons or 0.3%.

In January 2009, the number of persons in employment dropped markedly from the previous month. Compared with December 2008, 1.7% or 704 000 less persons were in employment whose place of residence was in Germany. Typically, a considerable decline in the number of persons in employment is recorded for the month of January. At the beginning of the years 2007 and 2008, that is during the economic upswing, the number of persons in employment dropped by nearly half a million. Due to the rather adverse economic development, the decline was stronger at the beginning of 2009 than in the two previous years. It has to be assumed that – in addition to the short-term economic trend – the relatively cold weather conditions this winter have had an additional negative effect on the development, while the regulations concerning short-time work probably had a mitigating effect on the employment decline.
After elimination of the typical seasonal variations, the number of persons in employment amounted to 40.21 million in January 2009. Compared with the preceding month of December, that was a seasonally adjusted decline by 84 000 persons.

Based on the labour force survey, Destatis determines unemployment figures according to the concept of the International Labour Organization (ILO). According to provisional estimates, the number of unemployed amounted to a seasonally adjusted 3.16 million in January 2009. When compared with the same month a year earlier, i.e. January 2008, the number of unemployed persons was by 170 000 or 5.0% lower, after seasonal adjustment. Compared with the preceding month of December 2008, the seasonally adjusted number of unemployed persons rose by 1.3%. The seasonally adjusted unemployment rate – which is harmonised across the EU and measured as the share of unemployed in the total labour force – amounted to a seasonally adjusted 7.3% for Germany and was hence still notably below the corresponding figure of the same month a year earlier (7.7%).

Struggling businesses can apply to shorten working hours in exchange for government wage and social-insurance subsidies for a period of up to 18 months, compared to just six months in the past.

Since October business have applied to cut the hours of some 775,000 workers, with more than 290,000 applications falling in January alone.

This may not prove enough for some firms and many economists have accordingly forecast that unemployment will rise back above 4m this year.

Companies in February announced they’re planning to add 600,000 workers to those already working shortened shifts, Labor Agency head Frank-Juergen Weise said in a Bloomberg Television interview today. Around 200,000 people were working shortened shifts in December, the latest month for which figures are available, he said.

The share of German companies planning to cut jobs rose to 30 percent in January from 18 percent in October, according to a survey of 25,000 companies by the DIHK chambers of trade and industry. In unadjusted terms, the number of jobless increased by 63,121 in February, today’s report showed.

Weise told reporters in Nuremberg he doesn’t expect unemployment to rise to 4 million people in non-adjusted terms from the 3.6 million recorded in February. There are “absolutely no signs of massive job cuts,” he said.

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