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German jobless rate up modestly, government mulls stimulus

BERLIN (AP) – Germany’s unemployment rate rose modestly to 6.1% last month, contained by extensive use of a short-time work program that kept millions of people on payrolls, official data showed Wednesday as the government mulled a stimulus package to reinvigorate Europe’s biggest economy.

The number of people registered as jobless rose to 2.81 million in May – 169,000 more than in April and 577,000 more than a year earlier, the Federal Labor Agency said. The unadjusted jobless rate – the headline figure in Germany – was up from 5.8% to 6.1%, following a sharper increase in April.

In seasonally adjusted terms, unemployment increased to 6.3% from 5.8%. Before the coronavirus pandemic hit, it had stood at 5% for months.

Germany’s increase has been moderate by international standards because employers are making extensive use of a government-backed short-time work program that allows them to keep employees on the payroll while they await better times. The federal labor agency pays at least 60% of the salary of employees who are on reduced or zero hours.

More than 10.1 million people were registered for that program by the end of April. The Ifo think-tank estimated this week, based largely on its questionnaires of companies, that 7.3 million people actually were put on short-time work in May. Germany has a population of 83 million.

On Wednesday, Chancellor Angela Merkel’s governing coalition was spending a second day hammering out a stimulus package meant to help kick-start the economy. It’s expected to be worth as much as 80-100 billion euros ($89-112 billion).

Germany already is offering a total of more than 1 trillion euros in aid via various packages, which include money to tide small companies and individual entrepreneurs through virus-related closures and to pump capital into bigger companies where needed.

The crisis has derailed the government’s dedication to keeping its budget balanced, long a point of pride. After six years in the black, it is borrowing 156 billion euros to finance the existing rescue packages and cover an expected shortfall in tax revenue.

Germany started loosening coronavirus restrictions on April 20, about a month after they were introduced, and the easing has gathered pace since. However, the economy went into a recession in the first quarter and that is expected to deepen in the current quarter.

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