NUREMBERG, GERMANY, July 8: The German federal labour office reported on Tuesday that the number of unemployed, which is hampering Bonn's drive to join the single European currency, rose again in June and predicted it would stagnate above four million next year.

Unemployment rose to a seasonally adjusted 4.37 million in June, an increase of 11,000 from the month before. However, in percentage terms the seasonally adjusted rate remained steady at 11.4 percent. "We are seeing signs of stability particularly in West Germany," said the office's president Bernhard Jagoda, but he added that the economy was still too weak to boost jobs. "Economic improvements are progressing but there is still no turnaround on the jobs market."

In western Germany, the number of people out of work on a seasonally adjusted basis fell to 3.041 million in June, down 1,000 from the previous month. Eastern Germany, still struggling to rebuild its economy after decades of communism, added 12,000 to unemployment rolls, with the total number of jobless rising to 1.333 million.

On an unadjusted basis - a politically sensitive figure butone that gives a murky view of developments - the number of Germans out of work actually fell to 4.222 million in June, or 11.0 percent, from 4.256 million or 11.1 percent in the previous month. Jagoda attributed the seasonally adjusted increase in unemployment to a rise in the number of people out of work in east Germany resulting from cuts in government work schemes.

Although the German government appears to be growing more upbeat about economic prospects this year, Jagoda said growth in the first half of the year was too weak and too focused on exports to fuel investment at home and thereby create jobs. The labour market would probably stagnate this summer and there were some signs that unemployment could begin to fall in September, he added. But another Labour Office official pointed out that any improvement would be moderate and unemployment levels were likely to stagnate over the next year.

"I am hoping, not predicting, hoping for a decrease of about 200,000 in average jobless for next year, which still leaves us with a figure above four million," Klaus Leven, Labour Office vice president, told Reuters Financial Television.

This year, unemployment is expected to average a post war record 4.2 million to 4.3 million, up from 3.9 million in 1996. High unemployment is playing havoc with Germany's attempts to qualify for European economic and monetary Union (Emu). It has cut tax revenue and pushed up social spending bills just as the government is struggling to cut the budget deficit to three percent of gross domestic product, the most troublesome Emu entry target. "The worst in the labour market is not over yet," said Guenther Redeker, an economist with Chase Investment in London. "Investment is still declining. We have to assume that the labour market will remain depressed in the absence of any investment activity."

Government and opposition politicians, embroiled in a dispute over government tax reform legislation, used the latest data to blame each for Germany's record unemployment.

"The Nuremberg figures make clear that the break through on the labour market has not yet been successful," said Peter Hintze, general secretary in Chancellor Helmut Kohl's Christian Democratic Union (CDU) party. "The Social Democrats will take on heavy liabilities if they continue, against the advice of every expert, to block the reform of our tax system," Hintze added. The Kohl coalition is trying to push through tax reforms aimed at stimulating the economy but the opposition Social Democrats have used their upper house majority to block it so far. Ernst Schwanhold, finance expert for the Social Democrats in parliament, said Germany's unemployed could only look for hope to French Socialist Prime Minister Lionel Jospin and Britain's Labour government ld by Tony Blair.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.