German unemployment drops as COVID infections decline

BERLIN (AP) — Germany's unemployment rate declined to 5.7% in June as Europe's biggest economy benefits from a sharp decline in coronavirus infections, official data showed Wednesday.

The unadjusted jobless rate, the headline figure in Germany, dropped from 5.9% in May, the Federal Labor Agency said. The total number of people registered as unemployed stood at 2.61 million — 73,000 fewer than the previous month and 239,000 fewer than a year earlier.

In seasonally adjusted terms, the unemployment rate remained at 5.9%, but there was a better-than-expected decline of 38,000 in the number of people counted as jobless.

COVID-19 cases have declined to their lowest level in months in Germany, allowing authorities to lift many restrictions — although they remain wary of the potential impact of the more contagious delta variant, whose share of new infections has been rising quickly.

Rises in unemployment in Germany and elsewhere in Europe have been moderate by international standards during the pandemic. That is because employers have made heavy use of salary support programs, often referred to as furlough schemes, which allow them to keep employees on the payroll while they await better times.

In Germany, the labor agency pays at least 60% of the salary of employees who are on reduced or zero hours.

The labor agency said it paid support for 2.34 million people in April, the most recent month it has estimates for. That was down from 2.7 million in March and far below a peak of nearly 6 million in April 2020.

“At first glance, today’s numbers suggest that the German labour market has already left the crisis behind,” Carsten Brzeski, an economist at ING, wrote in a research note. “At second glance, however, the high number of short-time workers should still be a good reminder of potential risks going forward, even if these risks look less threatening by the month.”