German unemployment falls
BERLIN, Germany (Reuters) -- German unemployment fell in November as a result of government labour market reforms, but the economy remained too weak to create new jobs, the Federal Labour Office said on Thursday.
The number of jobless people adjusted for seasonal factors fell 18,000 to 4.363 million, the third consecutive monthly decline. Analysts polled by Reuters had on average expected a drop of 6,000.
Both the Labour Office and the government attributed November's better data not to the economy but, as in previous months, to reforms aimed at pressuring unemployed people to take part-time jobs or training places or to become self-employed.
"The economy is -- despite the increasingly encouraging signs of a recovery -- still too weak to support the almost stable labour market and to create new jobs,'' said Economy and Labour Minister Wolfgang Clement.
Federal Labour Office President Florian Gerster said the tentative economic recovery now underway would not feed through into the labour market until mid-2004.
Unemployment in west Germany fell 10,000, while in eastern Germany it eased 8,000. For Germany as a whole, the adjusted jobless rate was unchanged at 10.5 percent.
Unadjusted, the jobless figure rose by 32,700 to 4.185 million, the Labour Office said. That was 159,000 more than a year earlier, but less than is usual for the month.
Call for tax cut
Clement said it was of the utmost importance that the opposition conservatives agree to a government plan to bring forward 15.6 billion euros in tax cuts to next year.
The conservatives have so far blocked the cuts because they would be mainly financed by new borrowing. Mediation talks are under way in parliament.
The number of new vacancies registered at the Labour Office, usually a leading indicator for recovery, rose fractionally compared with October. However outstanding vacancies fell for a seventh month to 275,000, a year on year drop of 20 percent.
Gerster's deputy Heinrich Alt said the government's reforms would also face a "litmus test'' next year when subsidies to jobless people founding their own firms are reduced.
"When the statistical effects wear off, we could see adjusted unemployment rising again,'' said Commerzbank analyst Ralph Solveen.
With the economy still fragile after three years of near stagnation, companies have continued to shed jobs in Germany and transfer labour-intensive operations to low-wage countries in eastern Europe or Asia.
Payrolls adjusted for seasonal factors fell 29,000 month on month in September to 38.119 million, the last month for which figures are available, the Labour Office said.
On Tuesday, LG.Philips Displays, a joint venture of Dutch Philips Electronics and Korea's LG Electronics, said around 1,000 jobs would be lost when it closed a picture tube plant in the western city of Aachen.
And last month, Alcatel SEL, the German subsidiary of French telecoms equipment firm Alcatel said it would close a factory in Stuttgart with the loss of 890 jobs.
Gross domestic product expanded 0.2 percent in the third quarter, helped by foreign demand for German goods, after the economy slipped into recession in the first half of the year.
According to the DIHK German chambers of commerce and industry association, foreign companies have been particularly unwilling to bring jobs to Germany because of the high cost of employing staff.
"We are seeing an increasing reluctance by foreign companies to invest in new jobs in Germany,'' DIHK managing director Martin Wansleben told the Die Welt daily.
