German unemployment falls more than expected

The number of unemployed people in Europe’s largest economy has fallen by 29,000 to 3.18 million, as a result of 40,000 vacancies being filled in August.

Although business confidence has dropped amid the suggestion that manufacturing companies may offload machinery staff due to the current financial turmoil, this has simply not been the case as the unemployment rate has beaten off forecasts.

The Federal Labour Agency in Nuremberg said that they expected a decline of 15,000 but instead the unemployment rate has remained steady at 7.6 percent which is the lowest level in 16 years.

It seems as though unemployment is being curbed by the manufacturing industry primarily as ZF Friedrichshafen AG, the car parts maker, plans to create 4,000 new jobs over the next year as the company grows.

A Federal Labour Agency spokesman did say however that the creation of new vacancies in the industry is still dependent on businesses still having a good credit rating and the recovery of the US, due to the fact that 10 percent of goods manufactured in Germany head to the US market.

However this newfound prosperity is having some affect on employers as they are currently experiencing the greatest pay demands in over 10 years.

An estimated 3.6 million workers who are part of IG Metall, Germany’s biggest trade union, are demanding a pay rise of around 8 percent.

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