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The natural rate of unemployment in Germany Chancellor Schröder is confronted with multiple problems in Germanys current economic situation: *         Rising unemployment numbers *         High "non-wage-labor costs" of 42% *         Inefficient and too expensive public services To really combat unemployment efficiently, Schröder has to tackle all three main factors influencing the rise in unemployment in Germany (as in all European countries): 1.         The natural rate of unemployment 2.         The frictional unemployment 3.         The structural unemployment These three factors are mainly …

…on the Euro exchange rates, thus making Germany less competitive internationally, leading to a reduction of net exports. Again negatively influencing aggregate demand and em-ployment. 4.         The proposed measures are in part very unpopular, especially with the base of Schröder's Socialist Party members. This political controversy could have a major impact. Either on the efficiency and implementation of certain measures or on the program in whole The graph below depicts possible scenarios of dept financing.