German Unemployment Hits Four-Year High as Crisis Shocks Economy

(Bloomberg) -- German unemployment rose to the highest level since late 2015, underscoring the struggle that even countries with well-established safety nets face in shielding workers from the pandemic-induced crisis.

The number of people out of work rose by 238,000 in May, following an even bigger jump the previous month, according to the Federal Labor Agency in Nuremberg. Economists at the agency's IAB research arm predict joblessness could rise above 3 million in the course of the year, compared to May's level of 2.875 million.

Generous state wage support has prevented yet more layoffs, with more than 7 million people estimated to be benefiting from government subsidies compensating them for fewer working hour. About one third of them are employed in the services sector, which has been unusually hard-hit as restaurants, retail stores and hotels were forced to shutter.

“The labor market continues to be under a lot of pressure due to the coronavirus pandemic,” labor agency chief Detlef Scheele said in a statement.

Joblessness rose by 180,000 in the west of the country and by 58,000 in the east, according to the labor agency's report. The overall rate rose to 6.3%.

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