Unemployment in Germany rose less than expected in December, but the number of Germans out of work will probably cross the psychological four million barrier by the end of January.
Two leading German economic institutes have cut their growth forecasts for this year and now rule out any noticeable recovery in Europe's largest economy before early next year. That could spell trouble for Chancellor Gerhard Schröder's re-election hopes in September, particularly if the conservatives continue to make poll gains by attacking the government's economic record. "The weak economy continued to make itself felt on the German labour market in December," said Mr Bernhard Jagoda, president of Germany's federal employment office. "I assume that the jobless level in January will not be below four million," he said, adding that average unemployment for 2002 could fall to 3.89 million "if things go to plan and with a little bit of luck".
There were 3.943 million people out of work in Germany in December, when seasonally adjusted, a rise of 6,000 on November - which Mr Jagoda described as a "weak end to a weak year".
The figure was below the 20,000 new unemployed forecast by analysts and means 9.6 per cent of the working population is out of work after 12 straight months of rising unemployment.
Mr Schröder described the December unemployment figures as "too high" and said he would announce measures to create low-wage jobs and reduce unemployment.
The most noticeable rise in unemployment was felt in heavily industrialised western Germany, with companies dependent on exports to the US laying off workers as a result of weak orders.
More than 130,000 jobs were lost in Germany last year with mass layoffs taking place across a broad economic front. Faced with reduced demand for exports from the US, the government has revised downwards its official growth projection for 2002 to just 1.25 per cent, a slight improvement on the growth projection of 0.75 per cent last year. But even that is too optimistic for some leading German economists.
The DIW economic institute has halved its forecast for economic growth in Germany this year to 0.6 per cent, from 1.3 per cent in October. "The economy won't recover quickly enough to take a bite out of unemployment this year," said Mr Gustav Adolf Horn, chief economist at DIW.
