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R 031224Z SEP 09
FM AMEMBASSY BERLIN
TO SECSTATE WASHDC 5071
INFO DEPT OF LABOR WASHINGTON DC
DEPT OF TREASURY WASHINGTON DC
EU MEMBER STATES
FRG COLLECTIVE

UNCLAS BERLIN 001068 
 
 
STATE FOR DRL/ILCSR AND EUR/CE (SCHROEDER) 
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 RATE REMAINS STEADY 
 
¶1.  SUMMARY.  There were once again mixed signals 
from the German labor market in August. 
According to the Federal Employment Agency, the 
number of seasonally adjusted unemployed in 
Germany which reflects the overall trend in the 
labor market fell very slightly(by 1,000) in 
August; the rate, however, remains at 8.3.  The 
small decline sharply contrasts with the 30,000 
increase predicted by many economists. 
Seasonally non-adjusted unemployment rose 9,000 
from July to 3.472 million and is now also at 8.3 
percent.  The impact of the economic crisis on 
the German labor market has been dampened by 
employers' use of a subsidized shorter work hour 
program instead of layoffs.  Nevertheless, there 
is general consensus that job losses are likely 
to accelerate in the coming months and 
unemployment is still expected to top 4.5 million 
in 2010.  END SUMMARY. 
 
¶2.  The latest labor market development in August 
once again raised (maybe unduly) hopes that the 
recession was easing.  Four weeks before the 
federal elections at the end of the month, the 
politically important seasonally non-adjusted 
unemployment figure (the one that makes the 
headline news) rose only by 9,000 from July to 
3.47 million, representing an unemployment rate 
of 8.3 percent.  Due to the German government- 
subsidized "short shift" work program and 
statistical changes, seasonally adjusted 
unemployment unexpectedly declined by 1,000 
during the same period.  The month-to-month 
jobless decrease was well below the 30,000 
increase forecasted by many economists. 
 
¶3.  The BA warned, however, that the improved 
jobless figures were also attributable to recent 
changes in the compilation of unemployment 
statistics.  Under the new methodology, people 
seeking employment through private placement 
agencies or receiving retraining within companies 
are no longer counted as unemployed.  Without the 
changes, the number of jobless would have been 
around 25,000 higher in August, the BA noted. 
Other measures, such as the major use of the 
"short shift" work program, have helped to 
prevent massive job cuts in Germany. 
 
¶4.  Employment Agency Chief Frank-Juergen Weise 
reported in his press conference that the effect 
of the recession on the German labor market had 
not yet been "dramatic" so far.  Given the 
relatively favorable labor market data in recent 
months, Weise was cautiously optimistic that the 
economic crisis would not hit the labor market as 
hard as expected, indicating that unemployment 
might not reach the expected 4 million mark by 
the end of the year.  Nevertheless, he warned 
against premature "euphoria," and noted that 
unemployment would definitely jump in 2010, but 
stay well below 5 million.  In his view, the 
"most dangerous month" in this scenario would be 
January 2011 when the short time work program 
will expire.  Economists also warned that changes 
in the labor market traditionally lag other 
macro-economic indicators which recently showed 
signs that the worst of the recession may be 
over.  In a press interview, Ralph Solveen, an 
economist at Commerzbank said although the August 
figures were "a positive surprise" and the feared 
collapse in the labor market did not happen, "it 
will certainly hit in the fall." 
 
¶5.  The sharp deterioration of the German economy 
has also slowed employment growth and reversed 
recent year gains.  German employment was at 
40.15 million in July 2009, about 144,000 less 
than a year ago.  Germany's export-oriented 
economy (notably automobile and machine tool 
industries) remains affected by waning global 
demand for manufactured products. 
 
¶6.  More detailed statistical information on 
Germany is available at the Federal Employment 
Agency's website: 
 
http://www.pub.arbeitsagentur.de/hst/services /statistik 
 
 
MURPHY