German unemployment hits four-year high

The number of Germans out of work has risen to its highest level since Gerhard Schroeder's Social Democrats came to power in 1998, according to figures out today from the country's federal labour office.

Adjusted for seasonal factors, unemployment grew by 35,000 from October to 4.16 million, pushing the adjusted unemployment rate to 10% from 9.9% last month.

On an unadjusted basis, unemployment climbed by 96,000 to 4.026 million in November. The figure was 236,900 higher than in November last year.

Yesterday finance minister Hans Eichel said that unemployment would be likely to climb "clearly" above 4 million this winter. It reached 4.29 million in February and again edged over 4 million in the summer.

The chancellor, Gerhard Schroeder, has blamed the world economic slowdown for his country's sluggish economy. He has proposed a plan to tackle Germany's stubbornly high unemployment that would see job-placement offices turned into fast-moving temporary staffing agencies.

He also intends to put more pressure on people to fill available positions and to reduce red tape for the self-employed.

Many economists trace the problem to Germany's high payroll taxes and cumbersome labour regulations that make companies think twice before hiring new workers. Employers fear they be unable to shed jobs in a downturn.

The conservative opposition has also complained that the plan does too little to reform the labour market, and has stalled it in parliament.

Today's jobless figures underlined again the differences between the more prosperous western part of the country, which had an unemployment rate of 7.8%, and the formerly communist east, with a 17.6% jobless rate.

Today Klaus Zimmerman, the head of Germany's DIW economic think tank, told Reuters news agency that he expected the European Central Bank to cut interest rates by at least half a percentage point when its governing council meets tomorrow.

"We have been saying for a long time that it is necessary to cut rates. The economy needed support, now it is almost too late," he said.