FRANKFURT (AFP) - The number of jobless in Germany rose in October, data showed, complicating the government's already tough task of trying to draft a budget that will respect European Union guidelines.
In what was the ninth consecutive monthly rise, the ranks of the unemployed swelled by a seasonally-adjusted 12,000 to 4.457 million people from September, according to the Federal Labour Agency.
While analysts had been expecting worse -- an adjusted rise of 15,000-20,000 people -- a Labour Agency official said that no drastic improvement in the number of jobless would be likely next year.
Indeed, in an ominous warning last month to Chancellor Gerhard Schroeder, the office said that the uncorrected jobless number could break through the symbolic five-million barrier this winter.
Unemployment here has been increasing steadily since the beginning of the year, with 160,000 more people on the dole now than in January. The rise means lower tax revenues as well as higher spending on unemployment compensation.
The bleak forecast comes at a time when Schroeder's government is struggling to keep Germany's public deficit in line with eurozone regulations as it tries to push its draft budget for 2005 through parliament.
The country, along with 11 other eurozone members, is bound by the EU's 1997 Stability and Growth pact to hold annual public deficits to less than 3.0 percent of gross domestic product (GDP).
But Germany, the largest eurozone economy, has repeatedly failed to meet that requirement and, according to the International Monetary Fund, could do so again next year if it does not take action.
"Our latest estimates suggest that if no additional measures are taken before the budget has passed in December, and if the government relies only on the measures in the pipeline, then the 2005 deficit will likely be about 3.4 percent of GDP," IMF economist Ajai Chopra said on Tuesday.
According to the Labour Agency, the adjusted number of jobless rose 14,000 in October from September in the relatively rich states of western Germany but fell in the poorer eastern states by 2,000.
The adjusted jobless rate remained unchanged at 10.7 percent.
Uncorrected for seasonal variations, the number of unemployed workers fell by 50,108 to 4.206 million, leaving a jobless rate of 10.1 percent, down 0.2 points from the previous month.
"The German economy is still on a growth course. Despite this positive tendency, no turnaround on the labour market can yet be recognised," Labour Agency president Frank Weise said.
Last month, the government said it expected the number of jobless in 2005 to fall by 25,000 compared to the current year, but Labour Agency board member Heinrich Alt said Wednesday that he expects a fall of only 15,000.
He said no great improvement could be expected because the German economy is likely to grow by only 1.8 percent next year.
Holger Fahrinkrug, an analyst at UBS bank, said the pattern in the German labour market suggested that domestic growth would remain weak in near future.
"We stick with our long-held view that the labour market restructuring in Germany ... will be negative for growth initially and is likely to lay the ground for a better aggregate growth performance only in the longer term."
11/03/2004 - 13:37 GMT - AFP