German Unemployment Again

Following this yesterday, there is this in the FT today:

Unemployment in Germany dropped sharply in June, providing an additional fillip to the government of Angela Merkel as the chancellor’s popularity ratings reached new highs.

The number of jobseekers in Europe’s largest economy fell by a seasonally adjusted 37,000 in June, almost double the drop economists were expecting and the steepest fall since March.

Figures released by the Federal Labour Agency yesterday put Germany’s unemployment rate at an adjusted 9.1 per cent.

The unbroken downward trend in joblessness underlines the strength and resilience of Germany’s economic recovery. At an un­adjusted 3.69m, the number of jobseekers in the country is now 1.5m below its peak of early 2005.

Data showed that 8,000 jobs had been created in May, the latest month for which employment figures were available. A rise in vacancies by 11,000 in June demonstrated the tightness of the labour market, which economists think could in time lead to inflationary wage increases.

Industry organisations say that between 40,000 and 50,000 engineering positions cannot be filled. The Federal Labour Agency said its data pointed to a figure of 10,000 to 12,000, with acute shortages in several regions.

Workforce shortages have overtaken unemployment as politicians’ chief economic concern, sparking debate in Berlin about the need for better training.

Another idea being considered in the capital is the introduction of a more welcoming immigration policy aimed at the highly qualified.

Volker Kauder, parliamentary head of Ms Merkel’s Christian Democratic Union, said on Thursday that the coalition would address the issue after the summer with a programme that would focus on improving applicants’ qualifications

“I do not want our companies to behave like some of our football clubs by refusing to train people at home and buying the best players abroad,” he said.

The comment was a response to Annette Schavan, the CDU education minister, who had called for higher, more selective, immigration.

The Social Democratic party, junior member in the coalition, has traditionally been the more sceptical party towards boosting immigration.

Immigration is no vote-winner in Germany, but the SPD’s position and its recent efforts to raise its profile as the more socially responsible party in the ruling alliance have yet to show a positive effect on its flagging ratings.