Eurozone Unemployment Reaches Record High
By Countercurrents.org
01 November. 2012
Countercurrents.org
Unemployment in the eurozone has risen to a new record, with more than one in four out of work in Spain and Greece. In Greece, labor is planning to strike.
There are now 18.49 million people without jobs in the 17 countries sharing the euro, said the European statistics office Eurostat on October 31, 2012 with an extra 146,000 joining the ranks of the unemployed last month. Across the whole 27 nation EU, 25.751 million men and women were without jobs last month – an increase of 169,000 from August – while the unemployment rate stayed at 10.6% [1].
Youth unemployment – joblessness among under-25s – rose to 23.3%, up from 21% during the same month a year ago.
Brussels and most eurozone governments have put cuts in spending ahead of schemes to create jobs, despite predictions that the situation will worsen over the coming months.
Greece's coalition government published €13.5bn of spending cuts and tax rises that will result in a sixth year of falling GDP and increase in the jobless rate.
Eurostat said the jobless rate across the eurozone increased to 11.6% in September, the highest on record, from a revised 11.5% in August.
The lowest unemployment rates were recorded in Austria (4.4%), Luxembourg (5.2%), Germany and the Netherlands (both 5.4%), which are near full employment. Spain (25.8%) and Greece (25.1% in July) had the highest unemployment in the eurozone, while France looks much like Italy (both at 10.8%), with a steady rise in joblessness. August data for Greece will be published next week, although the true picture is probably worse than the official figures show as a growing number of Greek workers remain nominally employed but have not been paid for some time.
Youth unemployment also hit a new high in Spain with 54.2% of under-25-year-olds out of work, up from 53.8%.
By comparison, the unemployment rate was 7.9% in the UK, 7.8% in the US and 4.2% in Japan in September.
Energy prices continued to rise, by 7.8%, but by less than the month before, when they climbed by 9.1% year-on-year. Food became dearer, however, with prices up 3.2% compared with 2.9% in September.
In some countries the unemployment figures are depressed by a rise in emigration. Ireland, Greece, Italy, Portugal and Spain have seen a strong rise in the number of people, mainly young, seeking work abroad.
Roughly 370,000 people emigrated from Spain in 2011, 10 times more than before the banking crisis hit the country in 2008.
Although about 86% of them were naturalized immigrants born abroad, there is also a growing number of native Spaniards saying "ya basta" ("enough is enough"). More than 50,000 left last year, up 80% since before the crisis hit.
A BBC report [2] said:
The eurozone as a whole is struggling to generate the economic growth needed to stimulate employment. Its economy shrank by 0.2% between April and June, with Italy and Spain stuck in recession and France registering no growth for the past three quarters.
The notable exception is the German economy, Europe's biggest, which grew by 0.3% in the second quarter. Growth there is expected to slow when preliminary figures for eurozone GDP between August and October will be published on November 15.
Meanwhile, Greek trade unions vowed on October 31, 2012 to bring the country to a halt next week after agreeing a two-day general strike in protest at the latest round of welfare and wages cuts [3].
The strike call came after the government outlined a series of austerity measures in its revised 2013 budget that predicts a sixth year of contraction and an escalation in its debt-to-GDP ratio to 167%. The prime minister Antonis Samaras said negotiations with the major lenders were concluded and it was time for MPs to vote through measures to secure €31bn (£24bn) of fresh loans.
The €13.5bn of cuts for 2013-14 include a two-year increase in the retirement age from the current average of 65, salary and pension cuts, and another round of tax increases, including the levy on interest from bank deposits, up from 10% to 15%. The vast majority of measures are to be implemented in 2013 and include a €4.6bn cut in pensions and a €1.2bn reduction in salaries.
Unions responded by announcing a 48-hour general strike that could persuade some coalition MPs to join opposition groups in rejecting a bill to be tabled by finance minister Yannis Stournaras next week.
However, there was confusion on October 31, 2012 after some European finance ministers warned they still needed to address some outstanding budget issues before releasing funds to the Greek government.
The strain in the governing coalition was evident earlier, in a parliamentary vote on a bill to allow the government to privatize public utilities. The legislation was passed, but 15 MPs from the Pasok party, which is a junior partner in the coalition, voted against certain articles. Dissenters included former prime minister George Papandreou, who opposed one article in the legislation.
Stournaras submitted the revised budget to parliament on October 31, 2012 but the deputy finance minister cancelled a presentation of the budget due to a 24-hour journalists' strike in protest at their industry healthcare plan being drawn into spending cuts of €455m.
The coalition is under pressure to pass the budget before the November 11 deadline set by Greece's international creditors. Officials are also concerned that Greece finds a way to refinance more than €3bn of loans due for renewal on November 16.
Ben May, an analyst at Capital Economics, said he was concerned that Greece's debts were already unsustainable and further austerity measures would aggravate the situation. He pointed to the International Monetary Fund's warning in its recent world economic outlook that the country's debts were likely to reach 183% of GDP next year. May said the expectation that a recovery from 2014 would bring the figure back to 120% by 2020 was nothing more than an illusion.
"There is still a significant risk that Greece will not survive another year inside the eurozone," he said.
Source:
[1] guardian.co.uk, Julia Kollewe and Phillip Inman, “Eurozone unemployment hits new high”, Oct. 31, 2012, http://www.guardian.co.uk/business/2012/oct/31/eurozone-unemployment-record-high-eurostat
[2] BBC, “ Eurozone unemployment jumps to fresh high”, Oct. 31, 2012, http://www.bbc.co.uk/news/business-20153497
[3] The Guardian, Phillip Inman, Oct. 31, 2012, http://www.guardian.co.uk/world/2012/oct/31/greek-unions-two-day-strike-austerity
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