Young people are bearing the brunt of Europe’s jobs crisis, it was confirmed, as unemployment across the eurozone soared to a record high.
Nearly one in four 16 to 24-year-olds across the 17 nations in the single currency is now out of work, according to monthly figures published by the EU’s data office, Eurostat.
The latest 95,000 rise in April took the overall jobless count to a record 19.38 million people, or 12.2 per cent, and puts unemployment on course to breach the 20 million mark by the end of the year.
The figures come against the backdrop of a eurozone mired in its longest recession since the launch of the single currency in 1999.
They also prompted fresh criticism of the austerity strategy being pursued by struggling southern European states, with one in four people out of work in Spain and Greece as such measures take their toll.
But young people are suffering the most, with 3.62 million out of work across the single currency bloc – 24.4 per cent of under-25s, a figure up 188,000 on a year earlier.
Well over half of those under 25 in Greece and Spain are not in work, compared to more than 40 per cent in Italy. By contrast in Germany – which has managed until recently to maintain growth despite the wider recession across the eurozone – unemployment stands at a much lower 5.4 per cent and just 7.4 per cent among under-25s.
Tom Rogers, senior economic adviser to the Ernst & Young Eurozone Forecast, warned of a “relentless” rise in youth unemployment. “Youth joblessness at these levels risks permanently entrenched unemployment, lowering the rate of sustainable growth in the future,” he said.
The European Central Bank (ECB) has cut interest rates to a record low of 0.5 per cent in a bid to spur the economy into life, but this week the Organisation for Economic Co-operation and Development called on the the ECB to do more to salvage a “dire situation”.
Pier Carlo Padoan, chief economist of the OECD, believes the eurozone’s lingering woes are the key risk to a global recovery and called on the ECB to adopt money-printing policies pursued by other central banks around the world, including the Bank of England.
In contrast with the eurozone’s jobless figures, the US economy has been growing steadily since emerging from recession in 2009 and its unemployment rate fell to 7.5 per cent in April. The jobless rate in the UK is also at a much lower level of 7.8 per cent, although workers have suffered real-terms pay cuts as salaries fail to keep up with the rate of inflation.
Professor Guglielmo Meardi, an expert on European employment relations at Warwick Business School, said: “After three years of labour market reforms and austerity, jobless figures are at a record high in the eurozone, while they decline elsewhere. This seriously questions the appropriateness of the tools used so far, all the more so that the countries that have reformed and cut with most zeal, Spain and Greece, are the ones with the worst results.
“In the short term, labour market deregulation facilitates dismissals but does not facilitate recruitment, so a negative economic cycle may be the wrong time to introduce it.”
The sharpest change in unemployment rates among the 17 eurozone countries was in Cyprus, which saw its jobless rate rise to 15.6 per cent from 14.5 per cent. The island became the fifth eurozone member to seek a bailout in March.
The OECD, which this week slashed its growth forecasts for the eurozone to a 0.6 per cent contraction in 2013, forecasts that unemployment will not peak until next year. Martin van Vliet, an ING Bank economist, added: “Looking ahead, an end to the eurozone labour market downturn is not yet in sight. Indeed, the European Commission’s business survey remains at levels consistent with further increases in unemployment. Even if the eurozone economy exits from recession later this year, the labour market is likely to remain in recession until next year.”
Analysts say the ECB is likely to take further measures to shore up lending to small and medium-sized businesses, which are currently not taking out loans for fear of a worsening economy and because banks are charging high rates. “So far the ECB’s actions have not translated into lower lending rates for businesses and households, failing to boost activity,” said Anna Zabrodzka, an economist at Moody’s Analytics.