BERLIN, July 4 - German unemployment is worsening to the point where it will be higher even in a year-on-year comparison by October at the latest, the Ifo research institute was reported on Wednesday as saying.
By the the end of 2001, unemployment will be above the 3.8 million level reported at end-2000, Ifo economist Willi Leibfritz told Berliner Zeitung newspaper.
German June unemployment data due on Thursday are expected to show a rise in the seasonally-adjusted jobless total for the sixth month in a row, with forecasts averaging a rise of 12,900 from 3.829 million in May.
But despite the monthly increases, unemployment has remained below year-earlier levels.
Ifo expects that to change later this year when it sees joblessness climbing above year-earlier levels as a result of an economic downturn so severe that some analysts are warning the country is at risk of entering recession.
"The decline in unemployment has stopped," Leibfritz said. He said it was alarming to see that even seasonally-adjusted joblessness had been increasing on a month-on-month basis since the beginning of the year.
Leibfritz said high wage settlements in the 2002 wage round would increase the pressure on companies to rationalise and lay off more workers. "If the 2002 wage round goes wrong the employees will be the ones who suffer," Leibfritz said.
Separately, Horst Siebert, head of the Kiel-based IfW institute and one of the government's panel of economic advisers or "wise men", accused the government of "re-regulating" the labour market with recent changes to employment rules.
He called for a departure from industry-wide pay settlements where necessary and said Volkswagen AG's planned "5000 x 5000" scheme, which has foundered so far on opposition from the IG Metall engineering union, would have been the right signal.
VW planned to create 5,000 new jobs at 5,000 marks ($2,166) a month to work on flexible contracts based around a maximum 42.5 hours a week.
But IG Metall set 35 hours as an upper limit, saying anything more would undermine an existing agreement under which workers have a four-day, 28.8-hour week. ($1=2.308 Mark)