Eurozone jobless rate hits 10-year high - Recession takes toll on labour market

Eurozone jobless rate hits 10-year high - Recession takes toll on labour market
By Ralph Atkins in Frankfurt
Copyright The Financial Times Limited 2009
Published: June 2 2009 11:33 | Last updated: June 2 2009 11:33
http://www.ft.com/cms/s/0/058c2a04-4f5c-11de-a692-00144feabdc0.html


Eurozone unemployment has leapt to the highest for a decade, highlighting how the continent’s deep recession is taking an increasingly severe toll on the labour market.

The seasonally-adjusted jobless rate in the 16-country region rose from 8.9 per cent in March to 9.2 per cent in April, according to Eurostat, the European Union’s statistical office. The latest figure was the highest since September 1999. In April last year, the unemployment rate was 7.3 per cent.

Recent forward-looking economic indicators have suggested that the pace of economic decline in the eurozone has slowed markedly since the beginning of the year. But latest unemployment data suggested that the rate at which jobs are being shed has not lost any intensity.

The impact of lengthening jobless queues on demand in coming months is a main reason why economists expect the eurzone’s economic recovery to remain weak for a protracted. “The eurozone recession may be past its peak, but for the labour market the worst is yet to come,” said Martin van Vliet at ING in Brussels.

Details of the latest unemployment report show Spain continued to suffer the most, with an unemployment rate of 18.1 per cent in April – up from 10 per cent a year before. However national statistics from Madrid showed an improvement in the number of jobless in May with the figure falling for the the first time in 14 months, as an €8bn job creation plan took effect .

The rise in unemployment in Germany – the eurozone’s biggest economy – has been more modest with the rate reaching 7.7 per cent in April, up from 7.4 per cent a year before.

German companies have shown a strong preference for hoarding labour, helped by government financial support, in the hope of an early economic rebound. German policymakers fear, however, that the much larger-scale job cutting is inevitable in coming months.

European policymakers will also be alarmed by the rise in youth unemployment. In April, some 18.5 per cent of the labour forced aged under 25 were without a job – up from 14.7 per cent a year before.