Fear and Loathing; Spiking unemployment brings a new round of national anxiety--and worse. The worries are exaggerated but the consequences are not, for Germany or Europe.

Byline: Stefan Theil

BRACE FOR THE DELUGE, the newsweekly Der Spiegel recently warned Germans. A wave of modern-day "serfs" is heading your way. Migrants from Poland and the Czech Republic--working for as little as 3 euro an hour, one third the standard wage--are coming to steal jobs from hardworking Germans.

Far-fetched? You bet. But there's no denying that Der Spiegel has its finger on a nervous nation's pulse. Last week the official number of jobless Germans reached an astonishing 5,216,000, or 12.6 percent, deepening an already palpable national angst. A new survey by the Consumer Research Group in Nuremberg finds that 77 percent of Germans worry about unemployment--a European anxiety record. With joblessness on a scale not seen since the 1930s, newspapers are replete with fraught references to Weimar, and to the economic chaos that engendered Hitler.

Overblown or not, Germany's state of fear is real--and so are its consequences. Worries about unemployment are a big part of the reason behind a three-year fall in consumer spending, which in turn dampens growth and kills jobs. Labor unions have begun to play on fears of those "serfs" from the east to bolster their bargaining clout and stem a shrinking membership, down from 12 million in 1991 to 7 million today. Never mind the truth, that much of the hard work in Germany's slaughterhouses--the focus of Spiegel's "expose"--has long been done by foreigners, or that migrants cause an insignificant part of the jobless total. More important is how the jobs scare threatens the European Union's next step toward integration. Citing unemployment and lackluster growth, Chancellor Gerhard Schroeder last week joined France and Belgium in putting the brakes on the planned opening of Europe's market for services.

That's a big deal. The European Commission's "services directive" is the centerpiece of EC President Jose Manuel Barroso's drive to boost Europe's competitiveness. It would cut red tape and eliminate special protections that prevent businesses and professionals from offering their services all across the Continent. Architects and engineers, plumbers and nurses would no longer face complicated hurdles to working in other EU countries. The boost in competition and trade would create between 600,000 ...