Germany nears 1990 jobless level

German unemployment rose for the 11th consecutive month in December - making the year's average jobless total the highest since reunification.

The seasonally adjusted jobless total rose a higher than expected 17,000 to 4.483 million, the Bundesbank said. Allowing for changes in calculating statistics, the average number of people out of work was the highest since 1990 - or a rate of 10.8%. Bad weather and a sluggish economy were blamed for the rise. The increase "was due primarily to the onstart of winter", labour office chief Frank-Juergen Weise said.

Unadjusted, the figures showed unemployment rose 206,900 to 4.64 million - with many sectors such as construction laying off workers amid bad weather. "The three years of stagnation in the German economy came to an end in 2004. But the upturn is still not strong enough" to boost the labour market, Mr Weise added. News of the rise came as government welfare reforms came into force, a move that is expected to see unemployment swell still further in coming months. Under the Hartz IV changes, the previous two tier system of benefits and support for the long term unemployed has been replaced with one flat-rate payout. In turn, that means more people will be classified as looking for work, driving official figures higher.

"Be prepared for a nasty figure for January 2005, about five million unemployed on a non-seasonally adjusted basis," warned HVB Group economist Andreas Rees. But he did add that the numbers should "subside" throughout the year, to remain near 2004's level of 4.4 million jobless. "I don't expect a strong and lasting turnaround until 2006," German Economy minister Wolfgang Clement said. By 2010, however, the Hartz IV reforms should help cut the average jobless rate to between 3% and 5%, he added. Europe's biggest economy has been too weak to create work as it struggles to shake off three years of economic stagnation. In recent months companies such as Adam Opel - the German arm of US carmaker General Motors - and retailer KarstadtQuelle have slashed jobs.
