Europe News

Economic woes cost German employment agency billions

Nov 7, 2009, 15:50 GMT

Nuremberg - The German employment agency will need to plug a funding hole of 16 billion euros (24 billion dollars) in 2010, an agency spokeswoman said on Saturday, confirming a media report. Job losses resulting from the economic crisis meant the agency could expect a 17.8-billion-euro deficit next year. It will be able to cover just 1.8 billion euros of that with its own reserves, the spokeswoman said, confirming a report by Spiegel news magazine. The rest would need to come from government coffers. The figures emerged from a draft budget, to be approved by employment agency executives next week. The employment agency collects workers' contributions to an unemployment insurance fund, which is in turn paid out to job seekers. The negative gap between these two figures had widened by 5 billion euros, according to the draft document. The calculations are based on estimates of 1.2 per cent economic growth in 2010, and an average of 4.1 million unemployed. The economic crisis has drained employment agency reserves, due to insolvency costs and a programme which tops up salaries for people whose working hours have been reduced due to economic shortages. At the same time, a drop in employment has reduced workers' contributions to the unemployment fund.

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