European jobless rate up modestly, Germany mulls stimulus

BERLIN (AP) – Europe’s unemployment rate ticked up modestly last month, contained by use of labour programmes that have kept millions of workers on payrolls and as some people stopped looking for work, official data showed yesterday.

The jobless rate in the 19 countries that use the euro rose to 7.3 per cent in April, the first full month when pandemic lockdowns hit the continent, from 7.1 per cent in March, statistics agency Eurostat said yesterday.

Europe’s rise in unemployment has been moderate by international standards because employers are making extensive use of government-backed short-time work programmes that allows them to keep employees on the payroll while they await better times.

In Germany, Europe’s largest economy, the federal labour agency pays at least 60 per cent of the salary of employees who are on reduced or zero hours. Some 10.66 million people were registered for that programme in March and April, and 1.06 million followed in May, the labour agency said – though it stressed that this doesn’t mean all of them were actually put on short-time work. Germany has a population of 83 million.

The European jobless figures also appear flattered by the fact that some unemployed people likely stopped looking for work and stopped counting as jobseekers.

German Chancellor Angela Merkel and German Finance Minister Olaf Scholz attend the weekly Cabinet meeting at the Chancellery in Berlin, Germany. PHOTO: AP

That seems to be the case in a country like Italy, where the jobless rate actually fell, to 6.3 per cent from eight per cent in seasonally adjusted terms. In Germany, the unemployment rate rose modestly to 6.3 per cent from 5.8 per cent according to its own labour agency measures.

Yesterday, Chancellor Angela Merkel’s governing coalition was spending a second day hammering out a stimulus package meant to help kick-start the economy. It’s expected to be worth as much as EUR80-100 billion (USD89-112 billion).

Germany already is offering a total of more than EUR1 trillion in aid via various packages, which include money to tide small companies and individual entrepreneurs through virus-related closures and to pump capital into bigger companies where needed.

The crisis has derailed the government’s dedication to keeping its budget balanced, long a point of pride. After six years in the black, it is borrowing EUR156 billion to finance the existing rescue packages and cover an expected shortfall in tax revenue.

Germany started loosening coronavirus restrictions on April 20, about a month after they were introduced, and the easing has gathered pace since. However, the economy went into a recession in the first quarter and that is expected to deepen in the current quarter.