April Unemployment at Highest Level Since Reunification

Germany’s Federal Labor Office in Nuremberg said 4.495 million people were without a job in April of this year -- that's 471,000 more than at the same time last year and the worst April since German reunification 13 years ago.

Though unemployment fell by 112,700 in April from March, the drop was less than usual for the month, as the job market continued to be plagued by structural problems and slow growth. The unemployment rate declined from 11.1 percent to 10.8 percent, but economists had hoped for a more significant decline in April, fueled by an increase in seasonal jobs.

“The worsening has continued,” said Florian Gerster, head of the Labor Office, blaming the unemployment problems on the weak economy. “We expect a longer period of stagnation.”

German unemployment adjusted for seasonal factors actually rose in April by 44,000 to 4.460 million. The jump was the 13th consecutive increase in seasonally adjusted unemployment. Economists often put more stock in seasonally-adjusted figures because they smooth out the sharp changes due to weather and holidays.

Things not likely to change soon

Germany’s economy grew only 0.2 percent last year, its slowest pace in nine years. Experts are now no longer predicting an upswing for Europe’s largest economy before next year, with unemployment stabilizing during the second half of this year.

"We expect the numbers to level off in the autumn," Manueala Preuschl of Deutsche Bank told the German news weekly Der Spiegel. "But a real turnaround -- with the figures beginning to decline -- won't take place until early next year."

The effects will be widely felt. Finance Minister Hans Eichel can expect 7 million less in his coffers due to decreased tax revenue. For an already overstretched budget, any added pressure increases the likelihood that Germany will not be able to stay within the euro zone’s budget deficit limit. The European Union requires euro member countries to have a budget deficit of three percent of gross domestic product or face sanctions.

Hoping to turn things around

The bad economic news has spurred the government to examine a more aggressive offensive against unemployment and the country’s sluggish growth. But German Chancellor Gerhard Schröder's reform proposals, dubbed “Agenda 2010”, have encountered heavy opposition from trade unions and left-wing members of his own SPD party.

Despite the howls of the left-wing hardliners, Economy and Labor Minister Wolfgang Clement has suggested tougher measure might be taken against the unemployed, including forcing them to take lower-paid so-called "mini-jobs".

In a report in the daily newspaper Süddeutsche Zeitung, Clement suggested that workers who declined lesser paid part-time jobs and remained on unemployment may incur penalties. "Unemployed people must take advantage of every opportunity to stand on their own two legs," Clement told the paper.