Euro zone joblessness, at 11.4pc, risks ‘economic disaster’
The EU warned on Monday of an “economic and social disaster” if joblessness among young Europeans continued to rise, calling for a joint effort to combat record high unemployment in the countries which share the euro.
Joblessness in the 17 country bloc was 11.4 per cent of the working population in August, stable compared to July on a statistical basis, but with another 34,000 people finding themselves out of work in the month, the EU’s statistics office Eurostat said. It was 16th straight monthly rise.
That left 18.2 million people unemployed in the euro zone, the highest level since the euro’s inception in 1999 and a rise of some 2.6 million people since early last year. About 25.5 million people were out of a job in the wider 27-nation European Union.
“It is clearly unacceptable that 25 million Europeans are out of work,” European Commission spokesman Jonathan Todd told a regular briefing. In a separate statement, the EU executive said the data showing a record 22.7 per cent of 18-to-25-year-olds out of work in Europe in August was of real concern.
“EU institutions and governments, businesses and social partners at all levels need to do all they can to avoid a lost generation, which would be an economic and social disaster,” the Commission said.
The debt crisis that began in Greece in 2010 and has spread across the euro zone to engulf Ireland, Portugal, Cyprus and the much bigger economy of Spain has devastated business confidence and sapped companies’ abilities to create jobs.
A European-wide drive to cut debts and deficits to try to win back that lost confidence has led governments to cut back spending and lay off staff, while stubbornly high inflation and limited bank credit are adding to household’s problems.
Joblessness could go beyond 19 million by early 2014, or about 12 per cent of the euro zone’s workforce, according to a new study by consultancy Ernst & Young, predicting that rate to rise to 27 per cent in indebted Greece. That compares with 24.4 per cent in the country in June, the latest data available.
“In this difficult environment, companies are likely to reduce employment further in order to preserve productivity and profitability,” the report said.
Euro zone manufacturing put in its worst performance in the three months to September since the depths of the 2008/2009 financial crisis, with factories hit by falling demand despite cutting prices, a survey showed on Monday.