German Unemployment on the Rise

German unemployment data released on Wednesday is giving Chancellor Gerhard Schröder a bad headache.

Almost four million people in Germany were reported jobless in December. Compared to the December figures for 2000, that's a rise of more than 150,000 people who are out of work. The jobless quota in Germany was at 9.6 percent in December 2001.

The jobless total traditionally rises in December as construction companies, farms and other outdoor employers let off workers because of winter weather.

But this year, the trend has been aggravated by layoffs from the industrial sector. Firms from manufacturing to finance are suffering from recession at home and abroad.

Unemployment figures haunt Schröder

For Chancellor Schröder, Wednesday's unemployment figures signify the worst possible start into the 2002 election year.

At the onset of his term as Chancellor, Schröder had promised Germans he would reduce unemployment to below 3.5 million. During the 1998 election campaign, Schröder said his government should be judged on its ability to cut unemployment.

This statement is now coming back to haunt him. Germany's conservative opposition parties have already made clear that the economy will clearly dominate their campaigning for the September 22 election.

Laurenz Meyer, General Secretary of the conservative Christian Democrats accused the government of doing nothing to boost Europe's biggest economy.

"Hundreds of thousands people were starting the year fearing for their jobs," Meyer said. "This government has gone into hibernation."

How to fight the recession in Germany

Chancellor Schröder blames the slowdown of the German economy on the U.S. recession. He expects more people will find work when growth picks up during 2002. "We will

achieve an upswing in 2002," he told Germans in a televised New Year's address.

So far Schröder has refused to launch an economic stimulus program. He says increased government spending would breach European Union budget rules.

Wednesday's figures have, however, spurred on some frantic activity among Schröder's Social Democrats and their coalition partners, the Greens.

Both parties are discussing job creation schemes. But economists are divided over the merits of such programs.

Despite the rise in unemployment, polls show that most Germans still think Schröder is doing a good job. The conservatives, however, are gaining ground fast.