R 021647Z MAR 09
FM AMEMBASSY BERLIN
TO SECSTATE WASHDC 3436
INFO DEPT OF LABOR WASHINGTON DC
DEPT OF TREASURY WASHINGTON DC
EU MEMBER STATES
FRG COLLECTIVE

UNCLAS BERLIN 000250 
 
 
STATE FOR DRL/ILCSR AND EUR/AGS 
LABOR FOR ILAB (BRUMFIELD) AND BLS (SORRENTINO, PSB 2150) 
TREASURY FOR OASIA 
 
E.O. 12958: N/A 
TAGS: ELAB ECON EFIN PGOV GM
SUBJECT: GERMAN UNEMPLOYMENT RISES AS ECONOMIC CRISIS DEEPENS IN 
FEBRUARY 
 
¶1.  Summary.  After long resisting the effects of the global 
economic downturn, the German labor market has deteriorated 
quickly since November.  German unemployment increased in 
February for a fourth straight month as falling exports and a 
deepening recession prompted companies to cut production and 
jobs.  Without the widespread use of the short-time benefits 
program by German companies, the overall deterioration would 
have been much worse.  However, the continuing slump in German 
exports and decline in business investment indicate that 
unemployment will increase further in the coming months, 
analysts said.  End Summary. 
 
¶2.  The adjusted jobless rate now stands at 7.9 percent, but the 
politically more important seasonally non-adjusted unemployment 
figure (the one that makes the headline news) rose by 63,000 to 
3.552 million, pushing the unemployment rate to 8.5 percent. 
The three most important indicators of the labor market all 
moved in a negative direction: unemployment rose, employment 
decreased and demand for labor declined further.  Employment 
Agency chief Frank-Juergen Weise reported in his press 
conference that use of the short-time benefits program had 
prevented an even bigger increase. 
 
¶3.  The number of workers taking advantage of the short time 
work benefit (Kurzarbeit) programs jumped to an estimated 
670,000 in January, up by about 400,000 from the previous month. 
The steep month-to-month increase was a ray of hope that 
companies wanted to keep their staff on pay rolls.  As part of 
its efforts to stimulate the economy, the German government has 
broadened the "Kurzarbeit" program whereby the Federal 
Employment Agency takes over a large portion of social security 
payments from companies should they opt to reduce the working 
hours for some employees instead of laying them off.  The program 
is now valid for 18 months, and the government hopes that the 
economic downturn will be over by then and companies will be 
able to resume normal operations. 
 
¶4.  The sharp decline in economic growth has slowed employment 
growth and reversed the gains made in recent years.  German 
employment hit a record 40.3 million in late 2008, reaching the 
highest level since German unification in 1990.  Since then, 
however, the global downturn has become increasingly visible as 
reflected by a series of announcements by major companies such 
as Chemical Giant BASF and Industrial Conglomerate Siemens to 
cut working hours in Germany.  Although Carmaker Volkswagen 
reportedly has experienced record sales so far in 2009 (a result 
of the government's 2500 Euro premium to scrap old cars), it 
announced its decision to switch to a short work week for the 
first time in 26 years. 
 
¶5.  More detailed statistical information for all of Germany is 
available at the Federal Employment Agency's website: 
http://www.pub.arbeitsagentur.de/hst/services /statistik 
 
KOENIG