Euro-Area Unemployment Rate Rises to Record 11.8% Amid Recession
The euro-area jobless rate rose to a record in November as the fiscal crisis and tougher austerity measures deepened Europe’s economic troubles.
Unemployment in the 17-nation region rose to 11.8 percent from 11.7 percent in October, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995 and in line with the median estimate of 27 economists in a Bloomberg News survey.
The euro-area economy has shrunk for two successive quarters and economists foresee a further decline in gross domestic product in the final three months of last year, forcing companies to cut costs by slashing jobs. The European Central Bank estimates contractions of 0.5 percent and 0.3 percent in 2012 and 2013.
“In the southern areas of the euro zone, demand is very weak and therefore there is no way to see fundamental improvement in labor-market conditions,” said Uwe Duerkop, an economist at Landesbank Berlin. “There might be some stabilization in the labor market in the second half of the year where one can expect this trend of growing unemployment numbers to stop, but that’s not the story for the moment.”
Today’s jobless report showed that 18.8 million people were unemployed in the euro area in November, up 113,000 from the previous month. At 26.6 percent, Spain had the highest jobless rate in the currency bloc. Germany’s jobless rate was 5.4 percent and France’s stood at 10.5 percent. Austria had the lowest rate at 4.5 percent.
The data also showed that youth unemployment was at 24.4 percent, with Spain’s rate more than double that at 56.5 percent.
Spanish banks are reducing work places. BFA-Bankia, the biggest Spanish lender set to receive European bailout funds, will cut about 6,000 jobs, or more than a quarter of its workforce. Banco Santander SA plans to cut 3,000 jobs in its Banesto SA unit as part of its buyout plan, Cinco Dias newspaper reported on Jan. 4.
In France, Peugeot SA announced on Dec. 12 that it will eliminate an additional 1,500 jobs by 2014, on top of 8,000 job cuts announced in July. Germany’s Siemens AG said on Dec. 19 it is eliminating 1,100 jobs at two energy units in Germany.
Europe’s economic malaise is deepening as governments across the region impose budget cuts to narrow their fiscal deficits. Spain and Cyprus last year joined the list of countries seeking external aid, following Greece, Portugal and Ireland.
Failure to find a solution to the euro area’s troubles, and the U.S. debt-ceiling debate, will result in a “major world economic crisis,” International Monetary Fund Managing Director Christine Lagarde said on Jan. 5.
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