Recovery likely to see German employment surge
By Hugh Williamson in Berlin
Published: February 20 2007 22:05 Last updated: February 20 2007 22:05
The number of people in work in Germany reached a five-year high in 2006 with a further surge in job creation expected this year, underlining the strength of the rebound in Europe’s largest economy.
Employment rose last year to 39.1m, compared with 38.8m in 2005 and 39.3m in 2001, the most recent highpoint, according to official data published on Tuesday.
The data are likely to reaffirm chancellor Angela Merkel’s view that it was correct last month to push through with a sharp value added tax rise, arguing that Germany’s strong economic upturn would weather any slowdown caused by the tax increase.
Economists predicted on Tuesday that, on a seasonally adjusted basis, German employment rose to an all-time high last month, reaching a projected 39.4m compared with 39.36m in December 2006.
Headline unemployment is likely to fall below 4m by late 2007, compared with 4.25m in January and more than 5m in early 2005, experts predicted on Tuesday.
Martin Werding, labour expert at Munich’s Ifo economic institute, said the employment figures were “another positive signal that Germany’s economy recovery was filtering through to the labour market”.
He said the expected fall in unemployment this year would be largely due to Germany’s strong economy, with the effects of recent labour market reforms having a larger effect from 2008 onwards. It was now clear that the three percentage point VAT increase “would not lead to the marked economic downturn” that some economists had last year predicted, he added.
The German economy grew by 2.7 per cent last year, with the government predicting a growth rate of 1.7 per cent this year. Economists and business groups are more optimistic, with the DIHK chambers of commerce last week forecasting an economic expansion of 2.3 per cent this year.
The services industry was Germany’s leading employment growth sector last year, with an increase of almost 400,000 to 28.3m. Employment in the construction industry, which has fallen sharply in recent years, grew by around 90,000 in the second half of 2006, with 2.2m employed in the sector between October and December last year. The number of manufacturing jobs also increased towards the end of 2006, with 7.8m employed in the last quarter.
Despite the positive jobs figures government officials said Ms Merkel’s grand coalition would persist with further labour market reforms, aimed in particular at creating greater flexibility among low wage workers.
Franz Müntefering, labour minister, this week said the battle against unemployment would reach a “positive turning point” this year. He is expected soon to present proposals that combine incentives for unemployed people to take up jobs with measures that include minimum wages in certain sectors.
Additional reporting by André Kühnlenz in Berlin
Published: February 20 2007 22:05 Last updated: February 20 2007 22:05
The number of people in work in Germany reached a five-year high in 2006 with a further surge in job creation expected this year, underlining the strength of the rebound in Europe’s largest economy.
Employment rose last year to 39.1m, compared with 38.8m in 2005 and 39.3m in 2001, the most recent highpoint, according to official data published on Tuesday.
The data are likely to reaffirm chancellor Angela Merkel’s view that it was correct last month to push through with a sharp value added tax rise, arguing that Germany’s strong economic upturn would weather any slowdown caused by the tax increase.
Economists predicted on Tuesday that, on a seasonally adjusted basis, German employment rose to an all-time high last month, reaching a projected 39.4m compared with 39.36m in December 2006.
Headline unemployment is likely to fall below 4m by late 2007, compared with 4.25m in January and more than 5m in early 2005, experts predicted on Tuesday.
Martin Werding, labour expert at Munich’s Ifo economic institute, said the employment figures were “another positive signal that Germany’s economy recovery was filtering through to the labour market”.
He said the expected fall in unemployment this year would be largely due to Germany’s strong economy, with the effects of recent labour market reforms having a larger effect from 2008 onwards. It was now clear that the three percentage point VAT increase “would not lead to the marked economic downturn” that some economists had last year predicted, he added.
The German economy grew by 2.7 per cent last year, with the government predicting a growth rate of 1.7 per cent this year. Economists and business groups are more optimistic, with the DIHK chambers of commerce last week forecasting an economic expansion of 2.3 per cent this year.
The services industry was Germany’s leading employment growth sector last year, with an increase of almost 400,000 to 28.3m. Employment in the construction industry, which has fallen sharply in recent years, grew by around 90,000 in the second half of 2006, with 2.2m employed in the sector between October and December last year. The number of manufacturing jobs also increased towards the end of 2006, with 7.8m employed in the last quarter.
Despite the positive jobs figures government officials said Ms Merkel’s grand coalition would persist with further labour market reforms, aimed in particular at creating greater flexibility among low wage workers.
Franz Müntefering, labour minister, this week said the battle against unemployment would reach a “positive turning point” this year. He is expected soon to present proposals that combine incentives for unemployed people to take up jobs with measures that include minimum wages in certain sectors.
Additional reporting by André Kühnlenz in Berlin
Labels: Germany, Jeff Altman, jobs, The Big Game Hunter, The Job Market Blog
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