Greece’s Unemployment Reaches More Than Quarter of Workforce
Greece’s unemployment rate climbed to more than a quarter of the workforce in July, extending its record high as the country’s five-year recession deepened.
The jobless rate rose to 25.1 percent from a revised 24.8 percent in June, the Athens-based Hellenic Statistical Authority said in an e-mailed statement from today. That’s the highest since the agency began publishing monthly data in 2004.
Greece’s recession and deepening labor slump has been exacerbated by austerity measures imposed to trim a budget deficit that was more than five times the euro-area limit in 2009. Prime Minister Antonis Samaras’s coalition government is hashing out a 13.5 billion-euro ($17.4 billion) package of budget cuts for 2013 and 2014 needed to keep rescue loans from the euro area and the International Monetary Fund flowing.
“The unemployment rate is a lagging indicator of domestic economic activity,” said Platon Monokroussos, head of financial market research at Eurobank Ergasias SA in Athens. “One should expect a further increase in the jobless rate for as long as domestic economic conditions remain depressed.”
The euro was little changed at $1.2885 at 1:24 p.m. in Athens. The single currency has gained 5.8 percent against the dollar since Aug. 2, when the European Central Bank first announced plans to purchase government bonds of distressed nations along with Europe’s rescue fund.
Greece’s unexpected budget blowout in 2009 triggered a financial crisis that has stunted the region’s economy and threatened a currency seen by its founders as permanent. Spain is considering asking for help and Cyprus is in talks for a lifeline, following Ireland, Portugal and Spanish lenders.
Central Athens was the scene of protests earlier this week when German Chancellor Angela Merkel visited the Greek capital as thousands of citizens vented frustration over her perceived role in the country’s economic misery. Some 7,000 police were deployed in the capital, with Merkel’s destinations cordoned off. Police said they detained 217 people and arrested 24.
European leaders are struggling to restore investor confidence as austerity measures across the 17-member currency region threaten to deepen an economic slump. At least five euro- member states are already in recession and Germany, Europe’s largest economy, is also cooling.
The IMF earlier this week cut its euro-area economic forecasts for this year and next, saying a further escalation of the region’s turmoil remains “a major downside risk.”
Economists are also growing more pessimistic on the Greek economic outlook, according to a regular Bloomberg survey released today. Greek gross domestic product may drop 3.1 percent in 2013 and 0.3 percent in 2014, it showed. Economists had previously forecast a contraction of 2.2 percent next year, followed by an expansion of 0.9 percent.
With the economy mired in recession, companies may continue to eliminate jobs. A breakdown of today’s release showed the female unemployment rate was 29 percent, while the jobless rate for Greeks aged 15 to 24 was 54.2 percent. That’s more than double the youth unemployment rate of 24.3 percent in July 2009, before the extent of Greece’s deficit became known, sparking the debt crisis.
The highest regional jobless rate was in Epirus and part of Macedonia in northern Greece, with 27.1 percent, up from 26.5 percent in June, the statistical authority said.
Samaras is seeking extra budget savings to qualify for more disbursements of emergency aid from the euro area and the Washington-based IMF. Their loan pledges to the country have amounted to 240 billion euros since 2010.
“What Greece has been doing in terms of budgetary adjustment is of a historic nature,” European Commission President Jose Barroso said today in Brussels. “To have Greece in the euro, I think, is critically important, not only for Greece but also for the euro area.”
The statistics agency last week revised Greece’s 2011 contraction to 7.1 percent of gross domestic product, instead of the previously reported 6.9 percent. Finance Minister Yannis Stournaras on Sept. 18 said that by 2014 the economy will have cumulatively shrunk by a quarter since the recession started in 2008.
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