German labor market braves winter chill

Updated 04 January 2013
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German labor market braves winter chill

FRANKFURT: Unemployment in Germany remains close to record lows as the labor market continues to hold up comparatively well to the euro zone debt crisis, official data showed yesterday.
In seasonally-adjusted terms, the jobless rate — which measures the number of people registered as unemployed against the working population as a whole — stood at 6.9 percent in December, only fractionally higher than the post-unification low of 6.8 percent seen throughout most of last year, the Federal Labour Agency said in a statement.
In concrete terms, the jobless total rose by 3,000 to 2.94 million on a seasonally-adjusted basis, a much smaller increase than the 10,000 analysts had been expecting.
"The German economy is feeling the pull of the recession in Europe. Indicators suggest that gross domestic product shrank in real terms in the fourth quarter," said agency chief Frank-Juergen Weise.
"So far, the labor market has held up fairly robustly to the economic deterioration. But the slowdown is leaving its mark," Weise cautioned.
Taking 2012 as a whole, the annual average jobless total fell by 78,837 to 2.897 million on a raw or unadjusted basis and the annual average jobless rate fell to 6.8 percent from 7.1 percent a year earlier.
"The labor market proved again to be very robust at the end of 2012, as during the course of the whole year, despite the difficult economic conditions," said Economy Minister Philipp Roesler.
"The positive condition of the labor market will largely help stabilize the domestic economy and increase the chances that the German economy can soon overcome its current phase of weakness," Roesler said.
Economists were similarly encouraged by the better-than-expected monthly jobless data for December.
"The German labor market remains in good shape," said Barclays Research economist Thomas Harjes.
It "again appeared relatively stable in December, despite poor weather conditions, indicating that most firms do not expect the currently weak economic environment to persist for much longer."
And while the German economy, Europe's biggest, is slowing noticeably, "any further increase in unemployment figures... should be modest while reduced hours worked and short-time work schemes act as a buffer," the analyst said.
Timo Klein at IHS Global Insight said that "overall, labor market conditions continue to be healthier in Germany than in most other countries in Europe."
And while the positive trend has come to an end, "we do not expect any major deterioration with large increases in joblessness during the coming months," he said.
Berenberg Bank economist Christian Schulz said that "as economic confidence is already improving, prospects are brightening for 2013. However, since the labor market usually lags the economic cycle, unemployment might still rise slightly over the next few months before resuming its downtrend."
Natixis economist Constantin Wirschke said he expected the German job market "to remain relatively robust in 2013."
"All in all, for 2013 we do not expect the labor market to deteriorate significantly. On the other hand, we also do not expect firms to add a significant number of jobs either. Therefore, the German unemployment rate will remain at a historically low level throughout 2013," he predicted.


Jordanian cabinet approves new IMF-guided tax law to boost finances

Updated 21 May 2018
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Jordanian cabinet approves new IMF-guided tax law to boost finances

AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”