German unemployment climbs to highest level since April 2011

Thu Nov 28, 2013 5:06am EST
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By Michelle Martin

BERLIN (Reuters) - German unemployment rose to its highest level in two-and-a-half years in November, new data showed, a day after Chancellor Angela Merkel unveiled coalition plans that row back on decade-old reforms credited with rejuvenating the labor market.

The number of people out of work increased for a fourth consecutive month, climbing by 10,000 to 2.985 million on a seasonally adjusted basis, data from the Labour Office showed. That was far more than the rise of 1,000 that economists had forecast in a Reuters poll.

Major German companies have said they will slash jobs, with construction and machinery group Bauer (B5AG.DE: Quote) planning to cut its workforce by as much as 3 percent and utility RWE (RWEG.DE: Quote) also laying out plans for thousands of job cuts.

Workers at aerospace group EADS EAD.PA staged walkouts across Germany on Thursday over plans to slash defense jobs at the parent of planemaker Airbus.

The jobless rate held steady at 6.9 percent, close to its lowest since Germany reunified more than two decades ago, and a level that crisis-stricken peers like Greece and Spain, where more than one in four people is out of work, can only dream of.

But Germany's leading economic institutes have warned that plans to introduce a minimum wage of 8.50 euros per hour, as laid out in a coalition deal agreed by Merkel and the Social Democrats (SPD) on Wednesday, could lead to job losses.

"Today's numbers send a clear warning that the labour market has reached its natural rate of unemployment," said Carsten Brzeski, senior economist at ING.

"To continue the current job market miracle or start a new one, a minimum wage should be flanked by additional measures to create new jobs."   Continued...

A man walks in front of a job centre in Berlin, October 30, 2008. REUTERS/Fabrizio Bensch