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Bad economy spurs jobs agency deficit

Germany’s Federal Labour Agency confirmed Saturday that it is facing a €17.8 billion deficit as the worsening economy, higher unemployment claims and government support for a shorter working hours scheme drain the its coffers.

Published: 7 November 2009 13:23 CET

Bad economy spurs jobs agency deficit

Photo: DPA

Policies such as Kurzarbeit, which cover a portion of workers’ pay packets if their employer has to cut hours, have kept unemployment lower than most economists expected. But the government, already facing record deficits and ambitious plans to cut taxes, will have to fill in most of the budgetary gap itself.

The agency, which is financed primarily by worker and employer contributions, expects to spend almost €54 billion next year, but will take in just €36.1 billion and has just €1.8 billion in reserves to cover the deficit itself.

According to a report first published by Der Spiegel newsmagazine, the agency expects to pay out €22.5 billion in unemployment benefits in 2010, a €4.8 billion increase over 2009.

The agency’s figures are certain to intensify the political debate over planned tax cuts. The new centre-right coalition of Christian Democrats and pro-market Free Democrats have planned tax cuts of €24 billion and the FDP in particular had hoped to implement those cuts immediately. With government budget deficits projected to pass €86 billion, CDU Finance Minister Wolfgang Schäuble has indicated he would like to roll back the planned tax reductions.

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German president decries 'violence' in politics after attacks

“We must never get used to violence in the battle of political opinions,” Steinmeier said at an event to mark the 75th anniversary of the German constitution.

The basic law, promulgated in 1949, was a response to Germany’s experience with political violence during World War II, Steinmeier said.

“No one knew better than the mothers and fathers of the constitution how violence undermines a democracy and tears down its foundations,” Steinmeier said.

READ ALSO: ‘Grundgesetz’ – what does Germany’s Basic Law really mean?

The threat of political violence had again reared its head in Germany, the president said.

“We have received news of physical attacks on elected officials and politically active people almost every day,” he said.

“I am deeply concerned about the coarsening of political life in our country.”

READ ALSO: How politically motivated crimes are rising in Germany

Earlier this month, police arrested a man on suspicion of hitting a former mayor of Berlin in the head during a visit to a public library.

Franziska Giffey, who is now the Berlin state economy minister and a member of Scholz’s Social Democratic Party (SPD), was treated in hospital for light injuries.

Giffey’s assault came just days after a European member of parliament, also from the SPD, had to be hospitalised after four people attacked him while he was out canvassing.

READ ALSO: Why are German politicians facing increasing attacks?

Senior members of the government have also been confronted by angry mobs in recent months, with Economy Minister Robert Habeck blocked from leaving a ferry by a group of protesters.

In his speech, Steinmeier also recalled the politically motivated murder of the conservative politician Walter Luebcke by neo-Nazis in 2019.

“His death is a reminder of how hate can turn into violence,” Steinmeier said.

This week also saw proceedings open against the alleged ringleaders of a group who are said to have planned to storm the German parliament and overthrow the government.

The group of so-called Reichsbuerger, who deny the legitimacy of the modern German republic, allegedly planned to take MPs hostage and had compiled “lists of enemies” to be eliminated, according to prosecutors.

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