BRUSSELS – Unemployment across the 17 countries that use the euro stayed at 11 per cent in April — the highest level since the single currency was introduced back in 1999, piling further pressure on the region’s leaders to switch from austerity to focus on stimulating growth.
The eurozone’s stagnant economy left 17.4 million people — out of an active population of around 158 million people — without a job. Unemployment rates are also continuing to climb in struggling Spain, Portugal and Greece. The EU’s Eurostat office said 110,000 unemployed were added in April alone. In the U.S. the unemployment rate stands at 8.2 per cent for May.
Menawhile, in recession-hit Spain, unemployment spiked to 24.3 per cent, the worst rate in the EU. It was up 0.2 points since March, and 3.6 percentage points compared to last year. Youth unemployment ballooned to a 51.5 per cent, up from 45 per cent last year.
Friday’s seasonally adjusted figures follow on from last week’s European Union summit, where leaders including the new socialist President of France Francois Hollande called for measures to boost growth and employment to offset the impact of stringent austerity policies. Experts argue that targeted measures could help get people, especially youngsters, off the unemployment lines.
Austerity has been the main prescription across Europe for dealing with a debt crisis that’s afflicted the continent for nearly three years and has raised the spectre of the breakup of the single currency. Three countries — Greece, Ireland and Portugal — have already required bailouts because of unsustainable levels of debt.
Investors are concerned that Spain, which is the eurozone’s fourth-largest economy and is currently struggling to contain a banking crisis in the middle of a recession, may soon be joining them in seeking international assistance.
Financially shaky countries such as Spain are facing rapidly rising borrowing costs on bond markets, a sign that investors are nervous about the size of their debts. Austerity was intended to address this nervousness by reducing a government’s borrowing needs, but there has been a side effect: Economies are shrinking across the eurozone as governments cut spending and raise taxes to reduce deficits.
This has prompted economists and politicians to urge European policymakers to dial back on short-term budget-cutting and focus on stimulating long-term growth. Pro-growth measures can include reducing red tape for small businesses, making it easier for workers to find jobs across the eurozone and breaking down barriers that countries have created to protect their own industries. Some economists go a step further and say governments should actually increase spending while economies are so weak — and make reining in deficits a longer-term goal
One area for growth could be the better use of the resources already at the European Union’s disposal. The EU has a pot of so-called “structural funds”, many of which are going unused even though several countries are in desperate need of cash.
One source of funds to get growth started in Europe could be the issue of so-called “eurobonds” — jointly issued bonds that could be used to fund anything and could eventually replace an individual country’s debt. Eurobonds would protect weaker countries, like Spain and Italy, by insulating them from the high interest rates they now face when they raise money on bond markets. Those high interest rates are ground zero of the crisis: They forced Greece, Ireland and Portugal to seek bailouts.
According to the Eurostat figures for April, Greece is the bloc’s second worst performer after Spain with unemployment creeping further upwards to 21.7 per cent in February, the last month for which figures are available. It compares to a rate of 16.1 per cent a year earlier. The economy in Greece has been contracting far more than expected late last year, taking employment with it in a downward spiral.
Athens is facing June 17 elections where jobs are a key issue together with the fundamental question of whether the country wants to stay in the currency zone.
Like Greece, Ireland has been forced to rely on an international bailout but its economy returned to growth last year. It is beginning to show in the statistics since overall unemployment fell to 14.2 per cent, when it stood at 14.7 only in December.
Unemployment was lowest in Austria, whose economy has been outperforming the European Union average, with 3.9 per cent, followed by Luxembourg and the Netherlands with 5.2 per cent.