Euro zone unemployment hits another record high in OctoberMonday 03 December 2012 09.35
Another month, another record unemployment rate for the economy of the 17 European Union countries that use the euro.
Figures released today by Eurostat, the EU's statistics office, showed that the recession in the euro zone pushed unemployment in the currency bloc up to 11.7% in October.
The rise from the previous record of 11.6% in September was anticipated in light of the euro zone's return to recession in the third quarter.
This is defined as two consecutive quarters of negative growth.
Eurostat found 18.7 million people were out of work across the euro zone, an increase of 173,000 on the previous month.
The wider 27-nation EU, that includes non-euro countries such as Britain and Poland, had an unemployment rate of 10.7% and a total of 25.9 million out of work.
While the euro zone's unemployment rate has been inching upward since June 2011, the equivalent rate in the US has fallen to below 8% as the world's largest economy continues its recovery from recession.
"The level of unemployment in Europe remains unacceptably high," said Jonathan Todd, a spokesman for the European Commission, the EU's executive arm.
Spain and Greece have the region's highest unemployment rates - both over 25%. Youth unemployment levels heading towards 60%, a potentially toxic long-term economic and political development. Both countries are in recession and struggling to convince investors as well as their own people that they can get a grip on their debts to improve living standards.
Both, along with a number of euro zone countries, have introduced tough austerity measures, such as cutting spending and raising taxes, in order to get a handle on their debts. However, reducing wages and pensions lowers demand in the economy to the detriment of the labor force.
Other measures taken alongside the austerity, such as reforming labour practices, boosting skills and education, are intended to promote jobs but they take time, both to enact and to feed through an economy.
"We expect, however, that progress in structural reforms, especially those that improve the functioning of labour markets, will help lower unemployment and facilitate new employment opportunities," Mario Draghi, the president of the European Central Bank, said in a speech today in Paris.
The Commission's Todd said all EU countries should implement a new scheme - to be officially proposed next week - to help young jobless people. The scheme would ensure that, within four months of leaving school or becoming unemployed, a young person would be offered a job, further education, a traineeship or an apprenticeship.
"This would extend to the whole of the EU existing good practice that exists in, for example, Austria, Finland and Sweden," Todd said.
Many economists think that unemployment in many countries will carry on rising for months to come, certainly as long as the economies remain in recession. Draghi expects the recovery to start only in the second half of next year.
The five euro countries at the forefront of the debt crisis - Greece, Spain, Italy, Cyprus and Portugal - are currently in recession. Others, like the Netherlands and Austria - neither of which is particularly debt-laden - are also close to officially falling into recession, having posting declines in third-quarter economic output.
Austria, nevertheless, has the lowest unemployment rate in the eurozone, at 4.3%.
The currency bloc's powerhouse economies, such as Germany and France, have also seen growth levels fall in the last year and that has ratcheted up the pressure on businesses to cut costs. Industrial conglomerate Siemens, for example, announced today it would cut another 4,700 jobs, not all in Germany.
Germany's unemployment rate stood at a still-low 5.4% in October, but France's was nearly double that at 10.7%.
Euro zone inflation eases to 2.2% in November
However, euro zone households got some good news in separate figures showing the annual inflation rate fell by more than anticipated to a 23-month low of 2.2% in November from 2.5% the previous month.
Since it was a preliminary estimate, Eurostat gave no reasons behind the decline but waning labour market pressures to lift wages are likely to have been, at least partially, behind the fall.
Despite the November decline, inflation is still above the ECB's target of keeping price rises at just below 2%. Few economists think the ECB will cut its main interest rate from the current record low of 0.75% at its monthly policy meeting next Thursday.