Germany unemployment estimated to sky rocket in 2009

According to the Nuremberg-based federal Labor Agency, the number of people unemployed dropped 10,000 in November to 3.15million. The previous month, October, 26,000 people lost their jobs and now the unemployment rate is held at 7.5%, this being the lowest in the last 16 years. This drastic reduction of businesses cutting jobs from October to November is due to the employers being slow to react to the decrease in sales.

“Companies haven’t started broad-based layoffs just yet,” said Joerg Lueschow, an economist at WestLB in Dusseldorf. “Carmakers are extending holiday shutdowns, running down flexitime accounts and temporary workers are being cut.”

German recession has a time lag of nine months according to the Clogne-based IW economic institute. This means that unemployment in Germany should get worse by the beginning of 2009.

Instead of firing employees, companies are shortening the work hours as well as not hiring any temporary staff. Adecco SA and Randstad Holding NV, the biggest suppliers of temporary staff, have already announced a decrease in profit.

“At the moment we’re still adding jobs in production, quality management, clinical research and drug safety,” said Biotest AG Chief Executive Officer Gregor Schulz. “But we’re doing it cautiously because we’re not quite certain about developments next year.”

Germany currently has the largest market in Europe for truck sales and after seeing its sales rising 21% in September, in October they fell 8.5%. This caused companies like Daimler AG and MAN AG to reduce their workforce and decrease production.

This situation however, is thought to get much worse. “We’re assuming that unemployment won’t increase to the same extent as the economic situation worsens,” Weise told reporters in Nuremberg. “While the labor market may not yet be affected by the economy’s downturn in December and January, it will be hit “in the second quarter at the latest.”

Germany is also the world’s largest car exporter but due to the crisis, car makers are drastically reducing production. Bayerische Motorenwerke AG has been seriously effected by this and will therefore have to cut 5,000 temporary staff as well as at least another 3,100 full time staff.

The Organization for Economic Cooperation and Development that unemployment in Germany is estimated to increase to 8.1% in 2009 and to 8.6% in 2010 from the 7.4% rate in September 2008.

HSBC to fire another 500 in the UK

500 more jobs will be eliminated by Europe’s biggest bank, HSBC. This reduction will include clerical and computer-service jobs as well as head office positions in its head office in London. The company employs 60,000 people in the UK alone and 335,000 worldwide.

HSCB has also fired 500 people in Asia this month due to the decrease in economic conditions. Another 1,100 workers lost their jobs in September in the banks global banking and market division because of the worst financial crisis since the Great Depression.

CTPartners have estimated that jobs lost in the financial services may double to 350,000 worldwide by mid-2009.

“We would never comment on any matter involving our staff without talking to our staff first,” said a spokesman for the bank. “The U.K. is a successful business. The environment in which we operate changes constantly and HSBC changes to match our customers.”

HSBC’s shares rose today 1.3% at the London Trading to 715 pence. The Bank has declined 15% this year and is now valued at £86.5 billion, being the best performing bank in the Bloomberg European Banks Index.

European unemployment estimated to rise to 9% by 2010

The organization for economic cooperation and development reported this week that unemployment in the euro area is set to rise from 7.4 this year to 9% in 2010. This is because the European, U.S. and Japanese economies will shrink even further next year due to the economic crisis.

“Consumers have become far more uncertain about keeping their jobs in the past months, they may have lost money in the stock market and in some European countries housing prices are declining, which isn’t exactly a stimulus for consumer spending,” said Martin van Vliet, an economist at ING Groep NV. “The economic climate makes people step up their precautionary savings.”

The measure of sales in the euro region is still below the 50 limit which indicates a contraction and this figure had further declined from 44 to 41 in October. This decrease was the biggest in the last five years history of the index. European sales have fallen even further because the recession eroded consumer confidence and spending.

We have seen that the economy has been shrinking for months now but when will this stop? Is the upturn anywhere near? I seriously hope so.

China interest rate cut over concerns on unemployment

The central bank lowered China’s one year lending rate by most since 1997, less than three weeks after Premier Wen Jiabao unveiled the $586billion stimulus plan. This interest cut was the biggest in 11 years highlighting the governments concern for spiraling unemployment, social unrest and the deepest economic crisis in almost two decades

“China’s trying to draw a line under unemployment and civil unrest,” said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. “It’s the most challenging set of circumstances Beijing has had to face since late 1989 that culminated in the protests in Tiananmen Square.”

Zhand Ping, chairman of the national development and Reform commission added to this saying that its “the nation’s top policy priority is maintaining growth to create more jobs.”

The central bank cut the key one-year lending rate 108 basis points to 5.58 percent. The deposit rate fell by the same amount to 2.52 percent.

China passed the UK in 2005, becoming the world’s fourth largest economy. The growth averages an astonishing 9.9% since 1978 allowing china’s economy to expand 68 times since 1978, when the free market reform began.

In 2007, the gross domestic grew 11.9% but analysts have predicted this number to fall to 5.5% next year, the slowest since 1990 where it only grew 3.8%.

China, being the world’s most populous nation, must aim for at least 8% growth to provide enough jobs for its fast going population. Exports haven’t been helping either as they are suffering from the recession in the U.S, Europe and Japan.

“Employment is being impacted by factory closures and many migrant workers are returning to their home towns,” Zhang said.

China is doing whatever it can to keep urban unemployment below 4.5%, even though it’s the highest in the past decade. This is mostly due to the closure of two-thirds of small toy exporters, the customs bureau said this week.

“Twenty percent of migrant workers may lose their jobs and in some provinces it is already at that level,” said Andy Xie, an independent economist in Shanghai who was formerly Morgan Stanley’s chief Asia economist. “When they return to their villages we don’t know how these things might work out.”

This number might still grow due to the recession so let’s hope something can be done to stop this rapidly growing unemployment as it is essential for the upturn of the economy.

Woolworth leaves 30,000 people fearing for their jobs

Shares in Woolworth, whose stock has fallen more than 90 percent since the beginning of the year, were suspended this morning (26Nov08) on the stock market as bosses desperately tries to come up with a rescue plan.

The giant is in desperate need of cash injections as its struggling to pay wages. Due to this, the company is for sale for a nominal value of £1 but comes with 385 million in debts.

It was reported by the sunday times that Hilco, a restructuring firm, offered one pound and a percentage of the company's debt for the stores. Property investor Ardeshir Naghshineh, one of the company's biggest shareholder, opposes that plan and wants to keep the stores.

London's Times newspaper reported the retailer may collapse as soon as today if managers can't find money for this month's wages.

"Its looking like the end for Woolies as we've known it, but I'm sure some sort of deal will get hammered out,'' Andrew Wade, an analyst at Numis Securities, said in an interview. "It's looking like equity holders won't end up with much.''

GM, Ford and Chrysler could create over 3,000,000 unemployments if they go bankrupt

The three giants in the auto-industry, General Motors, Ford and Chrysler, have requested a $25 billion aid from the government due to the crisis.

"General Motors, the largest US auto-maker, probably has weeks and not months before it runs out of money without federal aid" said Jerome York, a former GM board member. "GM can't continue to operate until a new U.S. administration takes over in January," he added.

Richard Wagoner, GM's President, stated that the bankrupcy of these three companies could lead to 3million unemployed around the world and a reduction of governments tax collect of more then $150billion.

"A GM collapse would mean more aid to specific states like Michigan, Ohio, and Indiana, and more money into unemployment and extended benefits,'' said Nariman Behravesh, chief economist at IHS Global Insight Inc.

"A GM shutdown would wipe out jobs among suppliers as well as at the automaker itself, pushing the U.S. unemployment rate next year to 9.5 percent, compared with current projections of as high as 8.5 percent" Behravesh said.

This means that unemployment in the US could go 1% higher then originally estimated. This is a very worrying situation which is worsened by the crisis as the newly unemployed find it virtually impossible to find new jobs.

Brown warns of unemployment rise

Gordon Brown warned of the increase in unemployment as he defended plans to increase government borrowing due to the recession. He also confessed the downturn will further increase unemployment, telling business audience in London that the government is now focused on finding new jobs to the unemployed.

"I can't promise people that we will keep them in their last job if it becomes economically redundant," he said. "But we can promise people that we will help them into their next job."

Lord Mandelson warned about the scale of the problems. "We are facing an unparalleled financial crisis, I don't think yet people have realised what the impact is going to be on our real economy, on businesses and jobs back home."

The government is continuing to focus on measures to help small businesses. Alistair Darling, the chancellor, and Lord Mandelson are expected to meet with the European Investment Bank to set out plans with the aim of helping smaller companies by offering small loans. Mr. Brown said to do "whatever is necessary" to ensure that banks increases its lending. He also defended the use of fiscal stimulus to "help people through difficult times", as "the responsible course of government is to invest at this time to speed up economic activity".

Business were reluctant to an increase short-term spending and borrowing. John Cridland, deputy director-general of the CBI employers' body, said: "We will look closely at any new Treasury plans when they appear, but actions to alleviate recession must be carefully targeted to ensure that the benefits outweigh the cost to the taxpayer."