Germany’s unemployment rate fell in June

Germany’s unemployment rate in June fell slightly to 8.1 percent from 8.2 percent last month, but the slight improvement doesn’t mean the economy is out of troubled waters yet, analysts said on Tuesday.

The Ministry of Labour said unemployment fell by 48,000, though more than 3.4 million Germans are still without work. Most of the improvement was in eastern Germany, where 33,000 new jobs were created as opposed to 15,000 in the west.

However, the numbers are not a sign of an improving economy or that the €80 billion stimulus packages are working, economists said. When adjusted seasonally, joblessness rose by 31,000, though the results were better than the loss of 50,000 jobs that economists predicted.

Compared to the same time last year, there are 250,000 less jobs in Germany.

German officials credit the Kurzarbeit, or "short time work" programme, for softening the blow of the recession on the labour market. More than one million workers are working fewer hours, but remain employed. The government subsidises a portion of their salaries for up to two years.

“We have saved hundreds of thousands of jobs through the short-time work program. Despite the breakdown of the economy, we have yet to see a dramatic rise in unemployment,” said Labour Minister Olaf Scholz on Tuesday in Berlin.

But Dr. Werner Marnette of Angela Merkel’s Conservative Christian Democrats told the BBC World Service he fears the programme is skewing the actual unemployment numbers.

“I’m afraid that we are facing much more unemployment and that means all these measures are somehow camouflaging the real situation,” said the former economy minister for the northern state of Schleswig-Holstein on the radio programme Business Daily Tuesday. “This [programme] is not the medicine for becoming competitive and overcoming the bad economic situation.”

He added that the government subsidy was propping up uncompetitive businesses and when the programme's funding runs out, unemployment will increase drastically as companies are forced to fold.

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Unemployment will skyrocket in 2010 once the subsidization of millions of jobs in factories with giant capacity under-utilization runs out.

September sees elections in Germany. Any drastic social cuts to salvage the fiscal deficits will only be made post September, right when unemployment keeps going up. This will bring out proletarian rage.

Union organized social unrest will be the likely result as in 1992/93.