Record euro area jobless rate sparks alarm

For anyone trying to visualise the euro zone crisis, the relentless upward sweep of Eurostat’s jobless rate graph speaks for itself.

According to data released yesterday by the EU statistics agency, some 12 per cent – 19 million people – have no work, a record since the currency bloc’s launch in 1999.

At a seasonally adjusted rate of 14.2 per cent, Ireland ranks sixth in the European jobless leaderboard – just ahead of Cyprus.

The data confirms that Europe’s labour market remains in the grip of its worst downturn since the early 1990s, after 22 straight months of decline. Overall in the EU some 11 per cent – 26 million Europeans – are jobless.

The situation is most acute in Spain and Greece, where the jobless rate in both countries has reached 26 per cent and is growing faster than elsewhere in Europe.

A quarter of Europe’s under-25s are out of work. Spain is Europe’s youth labour blackspot: more than a half of under-25s – 56 per cent – have no job. In Greece, the most recent figures from December 2012 suggest 58.4 per cent youth jobless rate.

'Unacceptably high'
"Such unacceptably high levels of unemployment are a tragedy for Europe and a signal of how serious a crisis some euro zone countries are now in," said Laszlo Andor, EU Employment Commissioner.

The seasonally adjusted labour market figures from Eurostat show the overall Irish jobless rate has dropped almost one percentage point on a year ago.

Irish youth unemployment dipped slightly last December but has returned to 30.8 per cent, just shy of where it was a year ago.

Other youth jobless blackspots in Europe include Portugal (38 per cent) and Slovakia (35 per cent).

Economic analysts said yesterday that the relentless rise in the jobless rate had the potential to undermine the single currency bloc – and the wider EU.

“The economic and social consequences of high unemployment continue to represent one of the most significant threats to the future of the euro zone,” said Marie Diron, senior economic adviser at Ernst & Young.

Economic contraction
The jobless figures contribute to a wider European economic gloom of five straight quarters of economic contraction in the euro area.

The closely watched Markit survey showed little sign of improvement on the horizon, noting yesterday net job cuts in the euro area for the 14th straight month.

“The increased drop in the industrial sector increases the risk of a greater downturn in the second quarter,” said Markit chief economist Chris Williamson.

Ireland was one country flagged for particularly severe job losses. The Irish Markit survey indicated the first deterioration in more than a year in Ireland’s manufacturing sector.

“An end to the euro zone’s labour-market downturn is not yet in sight,” said Martin van Vliet, economist at ING Bank NV, in a research note.

With many European politicians on Easter holidays, all eyes turn to European Central Bank president
Mario Draghi, who chairs a rate-setting meeting of the bank's governing council tomorrow.

After holding its key rate at 0.75 percent since July, some analysts have recalled Mr Draghi’s remarks on March 7th attaching “particular importance at this juncture to address(ing) the current high long-term and youth unemployment”.

“We cannot fully rule out a surprise rate cut or new unconventional support on Thursday,” said Mr van Vliet of ING.

Ms Jennifer McKeown of London’s Capital Economics flagged the rise in the French jobless rate, up to 10.8 per cent from 10.7 per cent last month, as “very worrying”.