German unemployment hits new highs

German unemployment has risen to a new post-second world war record as the number of people without a job climbed above 5.2 million in February, according to government figures released.

    The new figures will be a liability for Gerhard Schroeder

    The jobless figure in Europe's largest economy hit a new record for the second straight month.

    A new benefit system introduced on 1 January to encourage long-term unemployed people to take jobs has contributed to the rise because it counts more people as officially jobless, the Federal Labour Agency said on Tuesday.

    In February, 5.216 million people were out of work - up from 5.037 million in January, when the figure passed the politically sensitive 5 million mark for the first time.

    The unadjusted jobless rate rose to 12.6% from 12.1% - equalling the previous record, set in January 1998.

    New benefit system 

    The labour agency said the effects of the new benefit system accounted for 126,000 - or about three-quarters - of February's newly registered jobless.

    The reform, aimed at increasing pressure on people to take jobs, required many social welfare recipients to register as jobless for the first time.

    In February 5.216 million people
    were out of work 

    Cold winter weather that traditionally depresses construction activity and the weakness of Germany's economic recovery also contributed to the latest unemployment record, the agency said.

    The German economy grew by 1.6% last year after three consecutive years of near-zero growth, powered by stronger exports.

    But domestic spending by consumers has remained stagnant - causing an unexpected 0.2% decline in gross domestic product in the last quarter of 2004.

    That performance on Tuesday prompted the head of the government's council of economic advisers to lower his forecast for growth this year.

    The panel predicted growth of 1.4% last November, but now "we will land at 1%", Bert Ruerup told ZDF television.

    Politically damaging 

    Germany's stubbornly high unemployment has been a persistent liability for the government of Chancellor Gerhard Schroeder, who once promised to cut jobless numbers to 3.5 million.

    January's rise above 5 million was one factor in an unexpectedly poor performance by Schroeder's Social Democrats in elections in the northern state of Schleswig-Holstein last month.

    In May, the party faces a strong challenge from the conservative opposition in North Rhine-Westphalia, Germany's most populous state and a traditional Social Democratic stronghold.

    The party's regional chairman urged the federal government on Tuesday to do more to foster economic growth.

    "We are not going to create more jobs with growth of 1%," Harald Schartau told ZDF television.

    SOURCE: Agencies


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