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First Unemployed East Germans Register for Benefits

February 26, 1990

EAST BERLIN (AP) _ Several thousand East Germans applied Monday for the first benefits their government has ever given the unemployed, whose ranks may swell dramatically as the nation moves toward capitalism.

Labor officials said the number of applicants was much smaller than anticipated, but noted that economic reforms expected to cost hundreds of thousands of jobs have yet to be made.

At the moment, East Germany has a severe labor shortage because skilled workers continue leaving for West Germany. Industrial production has slowed and the nation is threatened with financial collapse.

West Germany has offered to bail out the East Germans by making its strong Deutschmark the currency of both countries, but only on condition East Germany adopt a market economy.

No final decision on monetary union and the economic reforms is planned until after East Germany’s first free elections March 18, but a decisive shift toward Western economic practices is expected soon afterward.

Economists say more competitive Western methods will force many East German factories to close or lay off employees, which could increase unemployment among the 9 million workers to 15 percent within months.

Finance Ministry officials proposed Monday that laws be altered to create more incentive for private enterprise by reducing income tax rates that require entrepreneurs to pay up to 95 percent of profits to the government.

Lower taxes also would encourage formation of small and medium-sized businesses, which could help reduce unemployment.

Meanwhile, the East German news agency ADN reported only about 10,000 people took part in regular Monday demonstrations in Leipzig that started the motor of East German reform in October with more than 100,000 marchers weekly.

The numbers of Monday demonstrators have dwindled in recent weeks, as campaigning for March 18 elections has gotten under way.

At the weekly negotiations with opposition groups, Defense Minister Theodor Hoffmann said reducing the size of East Germany’s army would only increase the number of unemployed.

Neues Deutschland, the Communist Party newspaper, proposed Monday that compulsory military service be ended in both Germanys and that a reunited Germany be demilitarized.

East Germany has experienced some unemployment throughout its 40-year history, but authorities would not acknowledge the problem because it contradicted Communist ideology.

On Monday, Labor Agency offices began taking applications for financial aid to the unemployed under regulations adopted Feb. 9.

They provide monthly payments of three-quarters of previous income, made up of 500 East German marks (about $100 at the official exchange rate) from the government and a contribution from the applicant’s last employer.

Labor Agency statistics indicate 7,500 East Germans are out of work, but unofficial estimates put the number at 10 times that. About 25,000 people lost their jobs when the government disbanded the secret police, under pressure from pro-democracy groups.

Officials said they were not certain how many East Germans applied for jobless benefits Monday, since people must apply at local offices hroughout the country.

Only a few dozen applicants were at the East Berlin office on Rosa Luxemburg Street, in contrast with the 4,000 the Labor Ministry had expected.

″We are completely surprised that so few have come,″ said Joachim Guenter, spokesman for the Labor and Wages Ministry.

Brigitte Schneider, a 52-year-old teacher, said she had been denied work in her profession because she was considered a ″traitor″ for not returning from a visit to West Germany in 1988.

She came back later that year, but was forced to take a job with a music publishing enterprise. She quit in January.

″I’m trying to get a little money, as I don’t know how else I will get by,″ she said. Ms. Schneider said she was living off savings, and ″now I have to worry about surviving.″

Although the official unemployment rate remains below 1 percent, tens of thousands of people are in jobs that will be made obsolete by better technology and others probably will be victims of more efficient operating procures.

The flight of 340,000 people to West Germany last year and more than 100,000 more since Jan. 1, 1990, has transferred the immediate unemployment problem to West Germany, where more than 2 million people are out of work.

A report Monday by the West German Institute for Labor Market and Employment Research said the continuing influx of East Germans and ethnic German refugees would keep unemployment high despite an economic boom expected to bring 4 percent growth this year.

East German immigrants have been accepting jobs spurned by unemployed West Germans, contributing to growing problem of long-term joblessness.

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