Eurozone unemployment swells to record high

Joblessness rate balloons to 11.6 per cent.

Greek Prime Minister George Papandreou
Greek Prime Minister George Papandreou. Photo: Getty

In latest confirmation that the eurozone crisis is far from relenting, unemployment in the 17-country bloc reached a staggering 18.5 million in September, according to the European Union's statistical office, Eurostat. 

The figures showed a marginal increase on August’s rate of 11.5 per cent, with the number of those out of work increasing by 146,000. But in comparison to last year’s September records, when unemployment was at 10.3 per cent, 2.2 million more Europeans find themselves out of work.

Similarly, youth unemployment (joblessness under the age of 25) recorded a 2.3 per cent annual increase on last September’s figure.

Across the whole 27-nation European Union unemployment reached a rate of 10.6 per cent, increasing by 169,000 since August.

Unemployment rate spiked in countries at the epicentre of the crisis. Spain posted a September-to-September increase from 22.4 per cent in 2011 to 25.8 per cent in 2012, with Portuguese unemployment swelling from 13.1 per cent to 16.7 per cent over the same period.

But it was Greece that recorded the most dramatic surge in joblessness, as unemployment figures shot from 17.8 percent in July 2011 to 25.1 per cent in July 2012 – the most recent month when figures were available. August data will likely be posted next week.

Overall, the record high in unemployment paints a bleak picture of the eurozone, plagued by declining consumption and waning business confidence. A recent survey published by the European Central Bank revealed that, amid rising uncertainty, businesses were borrowing less due to banks tightening their credit standards – a trend that is likely to continue into 2013.

“With surveys suggesting that firms are becoming more reluctant to hire, the euro-zone unemployment rate looks set to rise further”, said Ben May, an economist at Capital Economics.

Similarly, the introduction of various austerity packages is expected to drive unemployment skyward well into the fourth quarter. Greece’s plan to slash €13.5 bn off its budget through wholesale austerity measures is likely to prolong the malaise, as will Portugal's announcement on Wednesday to introduce the most substantial tax hikes in its democratic history to meet bailout targets.

“Given the ongoing financial difficulties of the European Union and the likelihood of continuing job losses in the public sector as austerity measures begin to bite, overall unemployment levels and youth unemployment in particular are likely to carry on rising for the foreseeable future”, said Andrea Broughton, an economist at the Institute for Employment Studies.

László Andor, the EU’s social affairs commissioner, warned against the dangers of privileging austerity measures due to their tendency to choke growth:

“Crisis solutions need to start from, not end with, job creation. With so many unemployed, debts and uncertainty will online rise”, he said.

The dismal new figures have stoked fears of a further downturn, with five countries – Greece, Spain, Portugal, Italy and Cyrpus – already in the midst of recession. After a 0.2 per cent contraction in the second quarter, analysts forecast that the eurozone will officially be in a recession after negative figures are expected to be published in mid-November.

Despite the woes of the eurozone’s peripheral economies, some respite came from its core as Germany posted a near-full employment rate of 5.4 per cent. The lowest rate was recorded in Austria – at 4.4 per cent – followed by Luxembourg, with 5.2 per cent.

The figures reflected the emergence of a “two-speed” Europe, with the ailing southern economies of Spain, Portugal and Greece contrast vastly with those of Germany, the Netherlands and other nations at the bloc’s northern core.

“Southern Europe needs help urgently, and not in the distant future”, Andor warned.

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The full list of September unemployment figures are posted below, in descending order. Those in bold are eurozone member-states, those not are members of the EU 27.

Spain - 25.8%
Greece - 25.1%*
Latvia - 15.9%**
Portugal - 15.7%
Ireland - 15.1%
Slovakia - 13.9%
Lithuania - 12.9%
Bulgaria - 12.4%
Cyprus - 12.2%
France - 10.8%
Italy - 10.8%
Hungary - 10.6%*
Poland - 10.1%
Estonia - 10%*
Slovenia - 8.4%
Denmark - 8.1%*
Finland - 7.9%
United Kingdom - 7.9%*
Sweden - 7.8%
Belgium - 7.4%
Romania - 7.1%
Czech Republic - 6.8%
Malta - 6.4%
Germany - 5.4%
Netherlands - 5.4%
Luxembourg - 5.2%
Austria - 4.4%

*August figures
**June figures