German jobless seen rising above 4 million

Ulrike Dauer, Dow Jones, Frankfurt

German unemployment could soon rise back above 4 million in unadjusted terms and every third German bank job is in danger over the next 10 years, bank economists said over the weekend.

"We must prepare for a very hard winter," HypoVereinsbank's Chief Economist Martin Huefner told German weekly paper Bild am Sonntag. "The number of unemployed could rise above 4 million before the end of the year," Huefner said.

His colleague from Dresdner Bank, Chief Economist Klaus Friedrich, expects to see the number of unemployed above 4 million early next year, according to the newspaper.

Juergen Pfister, Commerzbank head of economic research, said "We are on the verge of a recession," and also expects 4 million unemployed in the coming winter, according to the newspaper.

The last time German unemployment was above 4 million was in February and January, when 4.11 million and 4.09 million people, respectively, were without jobs.

A rise above 4 million makes the German government's goal of reducing German jobless to 3.7 million on average in 2002 more and more unlikely.

Germany's Federal Labor Office will release unemployment data for October Tuesday.

Germany's joblessness has fallen to an unadjusted 3.71 million in October, down from 3.74 million in September, but up from 3.61 million in October 2000, die Welt reports, attributing the figures to internal calculation at the Federal Labor Office. Seasonal factors are responsible for the month-on-month decline, the paper reports.

But the year-on-year rise marks the first rise in unemployment in the month of October in three years.

A Dow Jones Newswires consensus forecast expects the seasonally adjusted number of German jobless to have risen by 25,000 in October, after a 20,000 rise in September. The unadjusted jobless rate is expected to have remained unchanged at 9.0 percent.

By sector, construction and trade are the hardest hit and the banking industry has already announced significant job cuts.

Deutsche Bank aims at cutting 7,100 jobs by 2003 mostly without layoffs, Tessen von Heydebreck, Deutsche Bank board member for human resources, told Frankfurter Allgemeine Sonntagszeitung Sunday.

"Statistically, layoffs could happen through fluctuation, but this won't be realizable for everybody," Heydebreck was quoted as saying by the paper.

Heydebreck also rejected press reports, which say Deutsche Bank plans to cut a total of 15,000 jobs.

Deutsche Bank Chief Economist Norbert Walter sees one third of the jobs in the German banking sector cut over the next 10 years and 50 percent of branch offices closed, according to a report in German Sunday weekly Welt am Sonntag.

Meanwhile, the metals and electronics industries still hope they will be able to handle the lower number of new orders to the sector without layoffs, Martin Kannegiesser, president of the industry's employer association, told Bild am Sonntag.

Kannegiesser, who also is currently the president of the German Labor Office, said the labor office will have a budget deficit of around 4 billion deutschemark this year and also next year, due to the high unemployment expected, Berliner Morgenpost reports.