Europe

Home page

Europe

Eurozone jobless rate tops 10 percent

29 October 2010 21:21 (UTC +04:00)

Baku â€“ APA. Unemployment in the eurozone edged up in September, defying hopes that rapid economic growth in the previous months would translate into a swift recovery for the labour market, APA reports quoting CNN.
The jobless rate in the 16-member currency bloc reached 10.1 per cent, its highest level since the creation of the single currency in 1999, according to seasonally-adjusted data released by the European Union’s statistical arm.
The August rate was revised down to 10 per cent, the same level seen since March.
Policymakers had hoped that a spurt in the eurozone’s economy in the second quarter -- when gross domestic product rose 1 per cent -- would be enough to reverse the unemployment trend.
US unemployment by comparison currently stands at 9.6 per cent, 7.7 per cent in the UK and 5.1 per cent in Japan, using the same methodology.
The overall eurozone figure masks sharp divergences between the jobless levels seen in different member states, ranging from 4.4 per cent and falling in the Netherlands, to 20.8 per cent in Spain.
The jobs data were released alongside inflation figures which showed consumer prices in the eurozone by 1.9 per cent in October, compared to the previous year, up from 1.8 per cent in September.
"Inflation has accelerated sharply from levels of around 1 per cent at the start of the year, but this is entirely due to rising food and energy price inflation," said Nick Kounis, head of macroeconomic research at ABN Amro.
Policymakers will be worried that if the eurozone unemployment rate stayed steady even in a period of abnormally high growth over the summer, the prospects will be grim now that economic expansion has slowed notably.
Many so-called "peripheral" eurozone economies struggling with high levels of public debt saw rises in unemployment in September, notably Ireland, up 0.2 per cent to 14.1 per cent; and Italy, also up 0.2 per cent to 8.3 per cent
Meanwhile, the "core" countries led by Germany have fared better. The jobless rate in Europe’s largest economy fell 0.1 per cent to 6.7 per cent, and continued to fall in October, according to data released by its own labour authorities on Thursday.
France was flat at 10.0 per cent.
"It seems unlikely to us that job growth will pick-up enough speed to bring down unemployment in the coming months," said Nick Kounis, economist at ABN Amro in Amsterdam.
Even with an improving economy, the labour market is expected to deteriorate as a result of deep cuts in public spending expected in many eurozone economies.
"Public sector jobs are likely to be cut back in a number of countries as part of the fiscal consolidation measures, particularly in 2011," said Howard Archer, economist at IHS Global Insight, a consultancy.
Part of the fiscal tightening will be the withdrawal of measures that had supported the labour market, particularly subsidies granted to employers who retained workers on part-time contracts rather than make them redundant.
As well as being a political headache for national authorities, high unemployment also depresses consumer spending, which in turn feeds into higher economic growth.