German unemployment rose in January to the highest recorded level since 1933 as government labour market reforms and seasonal effects added more than half a million people to jobless rosters. German Economy and Labour Minister Wolfgang Clement said the picture was even more dramatic when people in public work schemes were included but appealed for calm in interpreting the data, which come just two weeks before a key regional election.
The Federal Labour Office said January's unadjusted German jobless total, which is given prominence in German media, rose 573,000 month-on-month to 5.037 million. On an adjusted basis, January unemployment increased by 227,000 to 4.714 million.
According to official historical figures obtained by Reuters, recorded unemployment is now at the highest level since 1933, when Adolf Hitler and his Nazi party came to power. No figures exist for the immediate post-war years of 1946-48.
At 12.1 percent of the working population in January, the unemployment rate remains far below the 30 percent level reached in the 1930s, when the population and labour force were smaller.
However, the rise may still embarrass Chancellor Gerhard Schroeder's government, elected in 1998 partly on a pledge to halve unemployment from some four million.
"This figure should not be blown up into grounds for panic," Clement told German television before the data was released.
Schroeder's Social Democrats, who have recovered strongly in opinion polls in recent months, face elections in Schleswig Holstein on February 20 and North Rhine-Westphalia on May 22.
"With the figures apparently the worst we've seen in the post-war period, these numbers are very charged politically," said Christian Jasperneite, an economist with MM Warburg.
"They could well put an end to the recent renaissance we've seen by the SPD in the polls, and with state elections due in Schleswig-Holstein and North Rhine-Westphalia, they may have an adverse effect on the government's chances there," he added.
There was also gloomy news for the German economy after separate data showed retail sales unexpectedly fell 0.3 percent month on month in real terms in December, as sales in all sectors apart from clothes and cosmetics slumped.
The sharp rise in unemployment was partly due to the introduction in January of the Schroeder government's "Hartz IV" welfare reforms, which added 222,000 to the adjusted total, the Labour Office said.
On a more positive note, the data showed seasonally adjusted vacancies jumped 16,000 in January, the biggest monthly rise in six years.
While pointing to the exceptional nature of the January rise in an apparent effort to contain any political fallout, Clement conceded that the government had more work to do in fighting Germany's main economic problem.
"Hartz IV will change the labour market...but it won't solve all of Germany's problems. You can only solve Germany's problems with growth which is over, or as near as possible, two percent," Clement said.
The government is expecting growth of 1.6 percent this year after 1.7 percent growth last year.
Clement noted that 1.4 to 1.5 million Germans were in public work programmes, meaning the actual number of citizens struggling was far higher than 5 million.
"That means we have 6.5 million people with, in some cases, dramatic problems on the labour market...that's dramatically high and we have to reduce it."
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