John Uskglass
Venerable Relic of the Wastes
So, what's this about Liberalization not being needed?
German jobless hits Nazi-era highs
Wednesday, February 2, 2005 Posted: 5:17 AM EST (1017 GMT)
BERLIN, Germany (Reuters) -- Germany's jobless total rose above five million in January for the first time since the 1930s, a labor office source has said, highlighting the main threat to Chancellor Gerhard Schroeder's 2006 re-election bid.
The surge was mainly due to new benefit rules that force all social welfare claimants to register as unemployed.
But the politically sensitive figure of five million underlines how little progress has been made in solving Germany's biggest economic problem since Schroeder came to power in 1998, pledging to halve unemployment from some four million.
Despite some signs of improving sentiment, big German companies including industrial giant Siemens AG and Deutsche Bank have continued to shed jobs.
On Tuesday, the country's fourth-biggest construction firm, Walter Bau, which employs 9,000 people, filed for insolvency.
As well as sluggish consumer demand caused partly by worries over jobs, Economy Minister Wolfgang Clement said Germany still had an enormous amount to do to reform its over-regulated economy and create more employment possibilities.
"We're sitting here a bit like Gulliver and a lot of our strength is tied down. We have to cut these ties back gradually but it's a fearfully difficult thing to do," he told Germany's n-TV television.
A source from the Federal Labor Office told Reuters that the unadjusted German jobless total increased by 573,000 last month to 5.037 million.
The source said the rise put the unadjusted jobless rate at 12.1 percent.
On an adjusted basis, unemployment increased by 227,000 in January, the source said. Official figures are due to be issued on Wednesday.
Biggest change since WWII
The sharp rise was mainly due to the introduction in January of the Schroeder government's "Hartz IV" welfare reforms, which added 200,000 to the unadjusted total, according to the source.
Hailed as the biggest change to the country's welfare system since World War Two, the measures have resulted in a cut in benefits for around one million long-term jobless and tougher means testing for recipients of unemployment payouts.
The reform has also removed the distinction that previously existed between unemployment benefit claimants and social welfare recipients, who were not registered as job seekers.
The government has long known that the change was likely to lift the total over the five million mark and ministers have carefully prepared the ground in recent weeks to ensure that the shock of the number was as limited as possible when it came.
Schroeder's Social Democrats have recovered strongly in opinion polls over recent months but failure of the reforms to produce results would threaten their chances of retaining power in a general election due in 2006.
"I think the Federal Labor Office will make it clear tomorrow that these figures have arisen as a result of the Hartz IV reforms," said Deutsche Bank economist Stefan Schneider. But the message was stark just the same.
According to official historical figures obtained by Reuters the unadjusted figure of 5.037 million would put the country's unemployment at the highest level since 1933, when Adolf Hitler and his Nazi party came to power.
No figures were available for the immediate postwar years of 1946-48.
"We are getting towards the dimensions seen at the beginning of Hitler's regime," said Dieter Wermuth, an economist at United Financial of Japan.
"Germany is increasingly getting a lower class, which it has not had for many decades, a growing class of people who do not expect to work ever. And that is politically very dangerous."
German jobless hits Nazi-era highs
Wednesday, February 2, 2005 Posted: 5:17 AM EST (1017 GMT)
BERLIN, Germany (Reuters) -- Germany's jobless total rose above five million in January for the first time since the 1930s, a labor office source has said, highlighting the main threat to Chancellor Gerhard Schroeder's 2006 re-election bid.
The surge was mainly due to new benefit rules that force all social welfare claimants to register as unemployed.
But the politically sensitive figure of five million underlines how little progress has been made in solving Germany's biggest economic problem since Schroeder came to power in 1998, pledging to halve unemployment from some four million.
Despite some signs of improving sentiment, big German companies including industrial giant Siemens AG and Deutsche Bank have continued to shed jobs.
On Tuesday, the country's fourth-biggest construction firm, Walter Bau, which employs 9,000 people, filed for insolvency.
As well as sluggish consumer demand caused partly by worries over jobs, Economy Minister Wolfgang Clement said Germany still had an enormous amount to do to reform its over-regulated economy and create more employment possibilities.
"We're sitting here a bit like Gulliver and a lot of our strength is tied down. We have to cut these ties back gradually but it's a fearfully difficult thing to do," he told Germany's n-TV television.
A source from the Federal Labor Office told Reuters that the unadjusted German jobless total increased by 573,000 last month to 5.037 million.
The source said the rise put the unadjusted jobless rate at 12.1 percent.
On an adjusted basis, unemployment increased by 227,000 in January, the source said. Official figures are due to be issued on Wednesday.
Biggest change since WWII
The sharp rise was mainly due to the introduction in January of the Schroeder government's "Hartz IV" welfare reforms, which added 200,000 to the unadjusted total, according to the source.
Hailed as the biggest change to the country's welfare system since World War Two, the measures have resulted in a cut in benefits for around one million long-term jobless and tougher means testing for recipients of unemployment payouts.
The reform has also removed the distinction that previously existed between unemployment benefit claimants and social welfare recipients, who were not registered as job seekers.
The government has long known that the change was likely to lift the total over the five million mark and ministers have carefully prepared the ground in recent weeks to ensure that the shock of the number was as limited as possible when it came.
Schroeder's Social Democrats have recovered strongly in opinion polls over recent months but failure of the reforms to produce results would threaten their chances of retaining power in a general election due in 2006.
"I think the Federal Labor Office will make it clear tomorrow that these figures have arisen as a result of the Hartz IV reforms," said Deutsche Bank economist Stefan Schneider. But the message was stark just the same.
According to official historical figures obtained by Reuters the unadjusted figure of 5.037 million would put the country's unemployment at the highest level since 1933, when Adolf Hitler and his Nazi party came to power.
No figures were available for the immediate postwar years of 1946-48.
"We are getting towards the dimensions seen at the beginning of Hitler's regime," said Dieter Wermuth, an economist at United Financial of Japan.
"Germany is increasingly getting a lower class, which it has not had for many decades, a growing class of people who do not expect to work ever. And that is politically very dangerous."
