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European unemployment has hit a new high, passing the 26 million mark for the first time in November, highlighting the dire conditions that persist across the region, even as the worst fears of a Euro Zone break up appear to have receded.
Unemployment within the 17 members of the Euro Zone climbed to 11.8 per cent in November 2012, while the figure for the wider European Union region stayed steady at 10.7 per cent, according to data released by Eurostat, the European Commission’s statistical body, on Tuesday.
The figures had risen sharply over the year, up by over 2 million in the 12-month period. The figures are well above the US, where the unemployment rate stood at 7.8 per cent in November.
Broken down by country, the figures reveal the vastly different economic conditions across the continent: in Spain, the unemployment rate stood at 26.6 per cent in November – a 3.6 per cent increase over the 12 months – and at 26 per cent in Greece, but is as low as 4.5 per cent in Austria and 5.4 per cent in Germany.
Economists expect the unemployment rate to continue rising until the summer or early autumn of this year, albeit at a slower rate than the second half of 2012.
“If you look at Spanish data, unemployment is increasing more slowly than in the past, temporary and easier-to-fire workers have been released, and what they are now left with are the core employees, who you will expect them to hold on to unless things take a turn for the worse,” says Christian Schulz, senior economist at Berenberg Bank.
He added that once the recovery begins, the unemployment rate is likely to fall more quickly than following previous recessions as a result of labour market reforms brought in by southern European nations.
“In Spain it is 50 per cent cheaper today to lay off staff, which will make firms less reluctant to hire new workers.”
The Euro Zone returned to recession in the third quarter of 2012, but is expected to begin a slow recovery in the current year. The IMF expects the region to grow by around 0.2 per cent in 2013.
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