FRANKFURT (AFP) - Unemployment in Germany, the eurozone's biggest economy, is continuing to rise and could even reach five million by the winter, new data showed.
And with companies mercilessly tailoring their workforces in an effort to drive down costs, and the half-hearted economic recovery in Germany not yet sufficient to shorten the dole queues, the jobless data will come as a bitter blow to the government's unemployment record half-way through its second term in office, analysts said.
Official data showed that the number of people looking for work in Germany rose more sharply in September than in the past six months, as economic recovery is not yet strong enough to persuade companies to hire more people.
The Bundesbank calculated that the number of people claiming dole rose by 27,000 to 4.445 million last month, equivalent to 10.7 percent of the working population.
The increase was much sharper than analysts had been expecting and was in fact the steepest rise since March.
Unemployment in Germany has been increasing steadily since the beginning of the year, with a total 148,000 more people on the dole in September than in January.
The Bundesbank data are seasonally adjusted.
A nominal decline in the raw or unadjusted numbers published separately the Federal Labour Agency in Nuremberg was solely attributable to the fact that unemployment usually decreases at this time of year at the start of the school term and as factories re-open after the summer holidays.
The labour office calculated that the unadjusted jobless total fell by 90,000 to 4.257 million in September.
But that decline did not herald any fundamental improvement in the labour markets, said labour agency president Frank Weise.
"Economic developments in Germany remain positive. But there is no sign of an improvement yet on the labour market. The recovery is not yet strong enough to reduce unemployment," Weise said.
With big companies slashing jobs -- thousands of employees are likely to face the axe as a result of the troubles at German department store operator KarstadtQuelle alone -- there is little sign that the situation on the German labour market will improve any time soon.
Furthermore, the government's deeply unpopular labour reforms could even push the jobless total up to five million in the winter, a top executive of the federal labour agency in Nuremberg, Heinrich Alt, warned Tuesday.
As part of the reforms, the unemployment and social welfare payment schemes are to be merged from next year. And that means that people currently receiving social welfare payments will have to register as long-term unemployed at their local labour office in order to be entitled to receive benefits from January.
"That will likely boost the jobless total by more than 300,000," estimated UBS economist Holger Fahrinkrug.
Morgan Stanley economist Annemarieke Christian calculated the changes could even swell the dole queues by as much as 400,000.
When Chancellor Gerhard Schroeder first came to power in 1998 and the jobless total stood at around 3.8 million, he vowed to halve unemployment by the end of his first term.
However, the impossibility of achieving that goal quickly became apparent, and when Schroeder's Social Democrat-Green coalition was elected for a second term in 2002, the aim was simply to bring down unemployment significantly.
Morgan Stanley economist Christian noted that separate employment statistics published by the federal statistics office, Destatis, in Wiesbaden showed a stabilisation in the employment situation in Germany.
Destatis calculated that a total 38.379 million people in Germany were in work in July, the last month for which data were available, up from 38.377 million in June.
In fact, the number of jobs created in the German economy since the beginning of the year now stands at 88,000.
But that was more a result of the fact that people were increasingly being employed in so-called mini-jobs (tax-exempted low-paid jobs), but could still continue to claim unemployment benefit, she suggested.