| Eurozone Unemployment continues rising |
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01/10/2009 14:06 (50 Day 22:38 minutes ago) | |||||
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The FINANCIAL -- The unemployment rate across the 16 countries that use the euro has risen again to the highest in more than 10 years in August as companies continued to cut jobs. Most economists expect the jobless numbers to keep rising into next year.
Unemployment in the 16-member euro region increased to 9.6 percent from 9.5 percent in July, the European Union statistics office in Luxembourg said on October 1, according to Bloomberg. That’s the highest since March 1999 and matched the median forecast from a Bloomberg survey of 23 economists.
The German and French economies both emerged from the recession in the second quarter and the euro-area economy probably followed in the third, according to the European Commission, the same source reported. Rising unemployment may be an obstacle to the recovery, including in Germany, where the government has been offering temporary subsidies to maintain payrolls. “It’s not clear as those subsidies expire just how quickly firms will shake out the excess labor,” said Colin Ellis, a European economist at Daiwa Securities in London. “There’s a significant chance that unemployment will rise again next year as firms realize the recovery is going to be muted.”
The number of people without a job in the eurozone is now 15.2 million. Among the member states, the jobless rate was highest in Spain, with a rate of 18.9%, and Latvia, with a rate of 18.3%, BBC informs. The lowest rate of 3.5% was recorded in the Netherlands. Unemployment rose in every country in the zone, with the smallest rises occurring in Belgium and Germany.
AP wrote that the rising number of jobless is a worry for European governments because businesses in the region are slow to hire and fire workers — meaning some people who lose their jobs may never find another one and will rely on welfare to survive.
Swedish Finance Minister Anders Borg called on EU governments to tackle these longer-term problems with labor markets as finance ministers meet for talks in Goteborg, Sweden, according to the same source. "We need to boost labor supply, boost labor market flexibility," he told reporters, describing this as a way to boost economic growth.
Companies across the euro region have slashed jobs to weather the worst recession in 60 years, Bloomberg informs. Siemens AG has cut its global workforce to 408,000 this year from more than 420,000, while Air France-KLM said on Sept. 4 it plans to cut 1,500 jobs. Dexia SA, Belgium’s biggest bank by assets, announced on Sept. 25 an additional 602 job cuts.
“We will likely see a massive increase in unemployment in Europe,” Jean-Claude Juncker, who heads the group of euro-area finance chiefs, said on Sept. 29, according to the same source.
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