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German unemployment could soar, official warns

“By the second half of next year, it is possible, on the basis of current data, that the number out of work will reach 3.6 million,” Frank-Juergen Weise told the weekly Focus.

In some months the figure of four million could be envisaged, he said, adding that in such a case the amount of contributions to the state unemployment fund would have to be recalculated.

Unemployment fell to a 16-year low of 2.988 million at the end of November, but the government and analysts warned a recession in Europe’s biggest economy would soon be putting more and more people out of work.

“The signs are growing that the economic slowdown is going to hit the labour market soon,” Weise’s office said at the time.

It warned that November’s drop was “significantly weaker” than the average of 56,000 seen in the last three years, and that hitherto successful efforts against unemployment were running out of steam.

Dow Jones Newswires nonetheless quoted Weise as saying that “the labour market is not expected to sour yet as strongly as the rest of the economy.”

Germany, the world’s biggest exporter of goods, fell into recession in the third quarter according to official figures and its finance minister has warned that in 2009 the economy could contract at its fastest rate since 1945.

Unemployment is a so-called lagging indicator because it takes time before an economic slowdown filters though to official unemployment figures.