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Europe: German Unemployment Surges Upward

Prague, 7 February 1997 (RFE/RL) - Unexpectedly and dramatically, the unemployment rate in Germany has surged in a single month to a postwar record high of 12.2 percent of the working force. A 1.4 percent jump in January, representing a half-million more unemployed, is the biggest single monthly increase in German joblessness on record.

With a total of almost 4.7 million now without work, the number of unemployed is also the highest registered in Germany since 1933, the year Adolf Hitler came to power (although Germany then had a much smaller population and a 30 percent jobless rate).

Official statistics released yesterday showed that unemployment continues to be highest in eastern Germany, where 19 percent are out of work. Also, more than half of the 500,00 newly jobless were recorded in the former Communist-ruled east, which contains less than a quarter of the overall national population. But in long prosperous western Germany, unemployment also took an unexpected jump last month to reach 10.6 percent.

The new figures shocked economic analysts, who had predicted a rise only one-third as great. More important, they posed new problems for long-time Chancellor Helmut Kohl, whose often stated goal was to cut his country's unemployment in half by the year 2000. As German joblessness has climbed over the past several months, Kohl's popularity has slumped correspondingly and his cabinet ministers have engaged in public squabbling over economic policies.

Yesterday's figures also provided ready ammunition for the country's Social Democratic Party opposition. SDP Chairman Oscar Lafontaine said that Kohl's failure to reduce unemployment has led the country into what he called "a dramatic employment crisis." Another SDP leader, Gerhard Schroeder, called for moving up the general elections due in 1998. Schroeder said that people now felt that, after 14 years in office, Kohl "can no longer pull the cart out of the rut."

Kohl remained publicly optimistic. In a newspaper interview published today, he said he was sure that the unemployment trend could be changed by the end of the current year. But he did admit he was no longer certain that he could reach his goal of cutting joblessness in half within four years.

Kohl's Finance Minister, Theo Waigel, admitted the latest data was alarming. But he blamed the unemployment crisis on the SDP for what he called "turning (its) back on the jobless" by blocking his tax and social-welfare reforms in the German Parliament's upper house, which is controlled by the opposition. Those reforms, Waigel said, are "now needed more urgently than ever before."

For analysts, Germany's new figures raised new questions about the ability of Europe's biggest economy to break out of two years of sluggish growth and its progress in eliminating structural rigidities that probably contribute to unemployment problems. And like France -- where high unemployment has been chronic for decades -- and some other West European countries, Germany has been engaging in a public debate over how to modify its generous social programs.

The major question that remains unresolved is whether or not to emulate the successful U.S. and British formula of what some analysts call "growth-with-insecurity." In France, where a generous "social contract" is still sacrosanct, most politicians still reject that formula outright. In Germany, the ongoing debate will now no doubt be influenced by the new job data. British Trade Secretary Ian Lang nailed the point home yesterday by saying bluntly that last month's loss of a half-million German jobs showed that continental social policies were just not working.

Germany's unemployment problem may also make it more difficult for the country to meet the requirements for entering the European Monetary Union (EMU) in two years time. Last month, the government estimated a budget deficit of 2.9 percent for this year that was just a hair away from the 3 percent ceiling allowed by the European Union's Maastricht Treaty for participation in the EMU. The new jobless figures translate into huge new unemployment payments that will certainly push Germany's deficit over the allowed ceiling. With France burdened with a similar problem, analysts now have additional reasons for speculating about the EU somehow arranging to modify the Maastricht criteria so as to allow the EMU to have a healthy birth.