Eurozone unemployment stays at record 11 percent

June 01, 2012, Friday/ 14:42:00

Unemployment across the 17 countries that use the euro stuck at 11 percent in April - the highest level since the single currency was introduced back in 1999, piling further pressure on the region's leaders to switch from austerity to focus on stimulating growth.

The eurozone's stagnant economy left 17.4 million people out of a population of some 330 million without a job, with rates continuing to climb in struggling Spain, Portugal and Greece. The EU's Eurostat office said 110,000 unemployed were added in April alone.

In recession-hit Spain, unemployment spiked to 24.3 percent, the worst rate in the EU. It was up 0.2 points since March, and 3.6 percentage points compared to last year. Youth unemployment ballooned to a 51.5 percent, up from 45 percent last year.

Friday's seasonally adjusted figures follow on from last week's European Union summit, where leaders including the new socialist President of France Francois Hollande called for measures to boost growth and employment to offset the impact of stringent austerity policies. Experts argue that targeted measures could help get people, especially youngsters, off the unemployment lines.

Austerity has been the main prescription across Europe for dealing with a debt crisis that's afflicted the continent for nearly three years and has raised the specter of the breakup of the single currency. Three countries - Greece, Ireland and Portugal - have already required bailouts because of unsustainable levels of debt.

Investors are concerned that Spain, which is the eurozone's fourth-largest economy and is currently struggling to contain a banking crisis in the middle of a recession, may soon be joining them in seeking international assistance.

Financially shaky countries such as Spain are facing rapidly rising borrowing costs on bond markets, a sign that investors are nervous about the size of their debts. Austerity was intended to address this nervousness by reducing a government's borrowing needs, but there has been a side effect: Economies are shrinking across the eurozone as governments cut spending and raise taxes to reduce deficits.

This has prompted economists and politicians to urge European policymakers to dial back on short-term budget-cutting and focus on stimulating long-term growth.

Greece is the bloc's second worst performer with unemployment creeping further upwards to 21.7 percent in February, the last month for which figures are available. It compares to a rate of 16.1 percent a year earlier. The economy in Greece has been contracting far more than expected late last year, taking employment with it in a downward spiral.

Athens is facing June 17 elections where jobs are a key issue together with the fundamental question of whether the country wants to stay in the currency zone.

Like Greece, Ireland has been forced to rely on an international bailout but its economy returned to growth last year. It is beginning to show in the statistics since overall unemployment fell to 14.2 percent, when it stood at 14.7 only in December.

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