German unemployment rises to 9.7 percent in July in new blow to Schroeder campaign

The Intelligencer ^ | August 8, 2002 | Geir Moulson

[spald]

German unemployment rises to 9.7 percent in July in new blow to Schroeder campaign

By GEIR MOULSON

Associated Press Writer

BERLIN (AP) -- German unemployment climbed back above the psychologically important 4 million mark in July, dealing a new blow to the government's re-election hopes Wednesday just as Chancellor Gerhard Schroeder tries to breathe new life into his faltering campaign.

The unadjusted unemployment rate in Germany's biggest economy rose to 9.7 percent, from 9.5 percent in June. Less than seven weeks before the nation votes, Schroeder conceded that no improvement was likely before the final quarter of the year.

Schroeder took power in 1998 after pledging to slash joblessness, but the total of Germans out of work was 4.047 million in July -- not far short of the 4.13 million in the same month four years ago, just before his election. His government sought to play down the rise, arguing that it was largely a result of seasonal factors.

"The figures aren't good, there is no argument about that," Schroeder said. But "they have to do with the worldwide economic downturn."

"I can only appeal to industry to make more trainee jobs available," added the chancellor, who this week launched his campaign by urging industry to do more to help fight joblessness rather than acting as "the opposition's fifth column."

In the formerly communist east, July's jobless rate was 18 percent, more than double the western rate of 7.8 percent.

While the number of Germans out of work rose by 92,600 from June, the July figure was 191,100 higher than for the same month last year. Joblessness was above 4 million last winter.

On Wednesday, opposition conservatives highlighted Schroeder's abandonment of a pledge to cut unemployment to 3.5 million by election day Sept. 22 as the economy cooled.

"More than 4 million out of work in the middle of summer -- that's a disastrous closing record for the Schroeder government," said Edmund Stoiber, Schroeder's conservative challenger, who has hammered away for months at Schroeder's economic record.

In response to polls consistently showing the opposition Christian Democrats ahead, Schroeder's party launched its campaign more than two weeks ahead of schedule on Monday.

Still, a survey carried out by the Forsa polling institute for Stern magazine, published Wednesday, showed support for the Social Democrats unchanged from a week earlier at 35 percent, with the rival Christian Democrats also static at 42 percent.

It put support for the Greens, Schroeder's junior coalition partner, at 6 percent, while the Free Democrats, Stoiber's likely partner, were on 9 percent. Forsa gave a margin of error of plus or minus 2.5 percent.

AP-CS-08-07-02 1134EDT

Copyright 1996 Associated Press. All right reserved This material may not be reproduced for publication, broadcast, rewritten or redistributed.

[spald]

Schroeder appears to be losing traction.

[Tuco-bad]

German unemployment rises to 9.7 percent

If the U.S. counted unemployment like the Germans and the rest of Europe, our unemplyment would be over 10%.

[FITZ]

We need to start looking at the real numbers, the government should break it down by families with full-time jobs that give benefits, part-time employment, no employment and include those on welfare in the numbers. Also to judge how well the economy is really doing, we need to numbers of people receiving WIC, food stamps, CHIPS etc and other government help even if partially employed.

[ItisaReligionofPeace]

Really? Care to back that up with facts? Maybe their six week vacations, ridiculous taxes and general socialist attitudes aren't the best environment for business to thrive...

[KC_Conspirator]

Really? Care to back that up with facts? Maybe their six week vacations, ridiculous taxes and general socialist attitudes aren't the best environment for business to thrive...

You have that right. The numbers are real and not gimmicky. In fact, its estimated that its the Europeans who low ball their unemployment numbers because they are routinely higher than the US. France is a great example.

I wonder what the poll numbers are for the ex-street thug for the communist Bader-Meinhoff gang. I hope he loses.

[Tuco-bad]

Maybe their six week vacations, ridiculous taxes and general socialist attitudes aren't the best environment for business to thrive...

Hmmm six week vacations, seems the workers thrive.

BTW - Don't we run a trade deficit with Europe, maybe we're doing something wrong?

[ijcr]

Just publish the number of Federal Employees....they match all your criteria.

[Tuco-bad]

We need to start looking at the real numbers, the government should break it down by families with full-time jobs that give benefits, part-time employment, no employment and include those on welfare in the numbers. Also to judge how well the economy is really doing, we need to numbers of people receiving WIC, food stamps, CHIPS etc and other government help even if partially employed.

Well said.

[Frank_Discussion]

Hmmm.... Ahh... Just love the smell of bait in the morning!

[LS]

What a moron you must be for such a statement. If we counted unemployment the way they did, we would have a ZERO unemployment rate.

How about this stat? Since 1980 (the REAGAN years) the U.S. created 25 million NET (you know what that means? Not sure you do, as other posts indicate a low educational level) new jobs (14 MILLION in the Reagan years), compared to Europe's total zero---that is ZERO (Do you understand zero?) net new jobs. Pathetic attempt to again slam the USA.

[LS]

No, it is flat wrong. The Euros count all sorts of GOVERNMENT make-work similar to how the Soviets used to claim they had no unemployment. They have not created---get this---ONE NET NEW JOB in all of Europe (save Ireland) in the last 32 years. It's an incredibly terrible stat, and one that shows that our system is vastly better, under any circumstances.

[Sunsong]

Go Stoiber -- get that socialists Schroeder out of there!

[TroutStalker]

August 8, 2002

PAGE ONE

Germany Tackles Labor Reform
Ahead of Next Month's Elections

Soaring Jobless Rate Makes Overhaul
Of Benefits Key Issue Ahead of Vote

By CHRISTOPHER RHOADS
Staff Reporter of THE WALL STREET JOURNAL

BERLIN -- Germany is facing up to reality: its labor market needs fixing.

Burdened with stubbornly high unemployment and a political rival that is making hay out of the matter, Chancellor Gerhard Schroeder is expected to endorse a plan that recommends reducing benefits that German workers have counted on for decades.

Among the ideas to be unveiled by an independent German commission next week: cutting the duration of jobless benefits and forcing the unemployed to take lower-paying jobs. While the measures may seem meek by U.S. standards, tampering with the safety net has long been considered taboo in socially conscious Germany.

But unemployment is now an albatross for Mr. Schroeder, who is trailing conservative challenger Edmund Stoiber just seven weeks ahead of national elections on Sept. 22. Making matters worse for the chancellor, the Bundesbank Wednesday said unemployment jumped to 9.9% in July, on a seasonally adjusted basis. Joblessness has risen for 18 of the past 19 months to above the politically sensitive four-million level, despite Mr. Schroeder's pledge upon his election four years ago to cut the level to 3.5 million.

Critics say Mr. Schroeder got himself into a mess by relying on global growth to boost Germany's export-driven economy, rather than embarking on labor reform that would have alienated the Social Democrats' traditional union support. Mr. Schroeder "expected the business cycle to do everything," said Martin Werding, an economist at the Munich-based Ifo Institute. "He should have looked at this much earlier."

Germany spends more on unemployment benefits, at about 2.2% of gross domestic product, than any other European country, according to Morgan Stanley. Those are outlays it can no longer afford, as its economy remains listless and its budget deficit butts against the limits allowed under the euro area's fiscal rules.

The biggest problem is long-term unemployment -- defined as those out of work for at least a year -- which accounts for over half of total joblessness. When the economy was booming in the late 1990s, for example, the number of long-term unemployed actually increased. A similar rise occurred in only one other European country, Greece, according to the Organization for Economic Cooperation and Development. Unlike the Netherlands and France, which cut joblessness to a large degree by encouraging part-time work, Germany reinstated heavy social payments for part-time positions.

The commission's most controversial measure would toughen the criteria for receiving jobless benefits. The panel, which is headed by Volkswagen AG executive Peter Hartz, wanted to cut the duration of unemployment insurance to 12 months from 32 months. But union representatives on the commission want the unemployed to be allowed to relocate or accept a lower-paying position after receiving benefits for six months, or face having payments reduced.

Commission members said the final plan may be a compromise between the two, or an experiment with both measures at different times. It also says the plan would cut the number of jobless in half, to two million, within three years.

But economists note the proposals address labor supply and not labor demand, which creates the jobs. What's more, they say, the plans don't touch on high collective wages and laws against firing, two of the main reasons that German companies don't hire -- and that keep foreign companies from investing.

The country's unemployment problem "reflects a complete failure of our system," said Norbert Walter, chief economist at Deutsche Bank AG in Frankfurt. "As long as we shy away from addressing the real taboos, this falls short."

For his part, Mr. Stoiber has dismissed the commission's forecasts on unemployment reduction, but his response has been largely that its ideas were co-opted from his election campaign. That suggests there isn't much difference between the two candidates' positions, and that some sort of compromise legislation could come soon. A parliamentary vote on the reform plan could come next month, but likely wouldn't go into effect before 2003.

Write to Christopher Rhoads at christopher.rhoads@wsj.com⁵

URL for this article: http://online.wsj.com/article/0,,SB1028713332180992840.djm,00.html

[TroutStalker]

See also:

Europe's Prized Leisure Life Becomes Economic Obstacle

[demlosers]

BTW - Don't we run a trade deficit with Europe, maybe we're doing something wrong?

Well Tuco, the U.S. has run a trade deficit for 30 years or so. It's not much of a problem if your economy produces more in relation to other economies, which BTW, the U.S. growth over that time period has out produced all the economies of the world.
To put it in other words, we have the extra cash to buy their trash. Running trade deficits is a sign of wealth and a sign of doing something right.

[lavaroise]

Just their mandatory joke of military/civil service is only in force to reduce the unemployment figures. Then you have people on parallel welfare who receive government stipends which are not considered unemployment yet which are equivalent to unemployment. Then you have the euro children who live with their parents until they are in their 40s and never work. This compounds to make the real unemployment figure in Europe much much higher than is officialy stated.

[aristeides]

It put support for the Greens, Schroeder's junior coalition partner, at 6 percent

If they're below 5 percent at the election, they lose their seats in the Bundestag.

[Tuco-bad]

What a moron you must be for such a statement

How about this stat? Since 1980 (the REAGAN years) the U.S. created 25 million NET

What a moron you must be for such a statement.

During the Reagan years unemployment went from 7.1% to 9.6% finally ending at 5.3%, a very poor showing indeed.

During this period 18 million (not 25 million) jobs, mostly low paying jobs were created.

During the Reagan years the U.S. population went up 20,000,000 thanks to the importation of low-wage immigrants to keep wages down, and corporate profits high.

Hey LS - I wonder how many of these immigrants were involved one way or another with the 911 attacks.

[Tuco-bad]

Running trade deficits is a sign of wealth and a sign of doing something right.

Geez - I didn't know the country of Chad was so wealthy.

ROTFLMAO

[demlosers]

Obviously, some countries[Chad] that have trade deficits are not good, but in the U.S. case it's OK. You certainly don't here Alan Greenspan complaining about our trade deficit every week. Occasionally, the liberal press complains about it even though they do not always understand what they are complaining about.