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Eurozone jobless highest since birth of euro

Jan 31 2012 13:33 Reuters

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Brussels - Eurozone unemployment has risen to its highest level since the euro single currency was introduced, data showed on Tuesday, a day after EU leaders promised to focus on creating millions of new jobs to try to kickstart Europe’s floundering economy.

Seasonally adjusted unemployment among the 17 countries sharing the euro rose to 10.4% in December, on a par with an upwardly revised November figure, the European Union’s statistics office Eurostat said.

It was the highest rate since June 1998, before the introduction of the euro in 1999.

“We’re looking at a further increase over the coming months, so that is worrying,” said Martin van Vliet, an economist at ING. “Look at Greece, where unemployment is some 20% and it is 23% in Spain. At a certain point this could lead to political unrest.”

After two years of a deep debt crisis and budget austerity, the number of Europeans out of work has risen to 16.5 million people, with another 20 000 people without a job in December from the month before. The rate steadily crept up through 2011 as growth stalled and recession loomed.

At a summit on Monday, Europe’s leaders tried to shift the debate from fighting the debt crisis to reviving growth in a bloc that produces 16% of global economic output.

They are looking to deploy €82bn of unspent funds from the EU’s 2007-2013 budget in an attempt to boost employment. But most economists expect scant progress while the eurozone’s high debtors are compelled to persist with harsh austerity programmes.

A growing gap between the wealthy nations of northern Europe and those of the poorer, less productive south overshadows any EU-wide growth and jobs policies implemented from Brussels.

Germany’s unemployment rate fell to 6.7% in January, separate figures showed, a new record low since figures for unified Germany were first published.

Austria boasted the eurozone’s lowest jobless rate at 4.1% in December, followed by the Netherlands at 4.9%.

But unemployment in Spain reached a new high of 22.9% in November and December. In Greece, joblessness was 19.2% for October, the latest data available. Unemployment reached 13.6% in Portugal in the final month of 2011.

“A budgetary straitjacket risks merely shrinking Europe’s economy and it will do nothing to ease the periphery’s competitiveness problems, the underlying cause of the sovereign crisis,” said Trevor Greetham, portfolio manager at Fidelity Multi Asset Funds.

Blight on the EU

High joblessness is a blight on the European economy, and youth unemployment is particularly problematic, particularly in Spain, where almost half of young people cannot find full-time work.

“For me this is the most painful aspect of the whole situation we’re facing in Europe, this great divergence on the labour market. Because if unemployment in Germany is falling, we may see less preparedness to help out the rest of the eurozone,” Van Vliet said.

After years of falling unemployment, the 2008-2009 global financial crisis destroyed job creation prospects in Europe and the ensuing sovereign debt crisis has only worsened the outlook.

In the 27-nation European Union, the number of jobless has risen steadily from a recent low of 7.1% of the working population in 2008 to 9.9% in December - some 23.6 million people. Economists say it could reach 11% by mid-2012.

“It’s very important that we don’t forget the growth and the jobs,” Danish Prime Minister Helle Thorning-Schimdt told reporters as she arrived at the half-day summit on Monday. “Everything starts and ends with growth and jobs,” she said. 

eu  |  unemployment  |  europe debt crisis
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