Unemployment in eurozone hits record high as recession deepens

  • Article by: RAPHAEL MINDER AND , DAVID JOLLY
  • Updated: October 1, 2012 - 7:53 PM

E.U. spokesman warns of "threat to social cohesion" and "risk of political extremism."

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A woman looked over paperwork as she left an unemployment bureau in Athens last month . Greeceā€™s unemployment rate stands at 24.4 percent, with more than 1.2 million people out of work.

Photo: Petros Giannakouris, Associated Press

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PARIS -- Unemployment in the eurozone hovered at a record 11.4 percent in August, according to data released Monday, underscoring the pain inflicted by the slowing world economy and the financial problems plaguing many of the countries that share the euro.

Unemployment in the 17-member euro area rose to 11.4 percent in August, the statistical agency of the European Union, Eurostat, reported from Luxembourg.

The agency also revised the figure for June and July to 11.4 percent, up from the previously reported 11.3 percent, which was already a record level for the region since the introduction of the euro in 1999.

The jobless numbers, which compare with the August rate of 8.1 percent in the United States, suggest that Europe's recession is deepening, despite the efforts of policymakers and finance ministers to cure the region's malaise.

Unemployment in Greece and Spain, the eurozone's most economically troubled members, reached new euro-era highs. And as both countries move ahead with plans for even tougher austerity budgets -- Greece to appease its international creditors, Spain to potentially clear the path for European aid -- their job outlooks are expected to worsen further.

Greece had an unemployment rate of 24.4 percent in June, the latest month for which data are available.

Spain, meanwhile, still had the region's highest jobless rate, at 25.1 percent, and an even bigger problem among young people. Nearly 53 percent of Spaniards under age 25 were unemployed in August.

"Youth unemployment, especially if prolonged, threatens to harm the self-esteem and economic potential of young people now and in the future," Jonathan Todd, a spokesman for the European Commission, said Monday.

"This could also pose a serious threat to social cohesion and increase the risk of political extremism," he said. "E.U. 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."

Reinforcing the dismal data, the Markit Economics purchasing managers' index Monday confirmed an initial report showing that eurozone industrial production declined in September for a seventh consecutive month.

Jennifer McKeown, an economist with Capital Economics in London, noted in a report that while the economic strain is being felt most heavily at the periphery of the eurozone, in places like Spain and Portugal, "the situation is bad in the core, too," with the French jobless rate at 10.6 percent. Last week the government of France said the number of jobless people had passed 3 million for the first time since 1999.

The data Monday "suggest that the industrial sector is experiencing a sharp downturn," McKeown wrote, "and with unemployment at a record high, the outlook for the consumer sector is gloomy, too." She estimated that the gross domestic product of the eurozone would shrink 2.5 percent next year.

Olli Rehn, the European commissioner for monetary affairs, visited Madrid on Monday and met with the Spanish prime minister, Mariano Rajoy, and the economy minister, Luis de Guindos, but refused to speculate afterward whether the Spanish government would be pushed into asking for more European help to meet its debt financing obligations.

However, Rehn said Europe stands "ready and willing" to act in response to a bailout request from Spain, should one be forthcoming.

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