Eurozone Unemployment Level Remains High

By: Dr. Mike Campbell

One of the most reliable signs of a sustained economic recovery is rising employment. As the economy contracts in a recession, demand for a company’s goods and services falls off meaning that they do not have enough work for their existing employees and staff are “downsized”, “let go”, “reduced in force” or just plain “fired” to keep overheads as low as possible. When economic output kicks in again, a company’s order book will begin to fill and eventually, enough confidence will be generated over their future that they start to recruit staff in order to be able to cope with the renewed demand cycle. This is why economists pay particular attention to unemployment statistics: they provide a clear picture of the recovery/recessionary situation.

Eurostat have just released the unemployment data for nations using the single European currency, the Euro. The data show that the overall level of unemployment across the Eurozone has remained unchanged at 10% for the fifth straight month. This means that the recovery has begun since unemployment has not worsened significantly, but it shows that confidence in the depth of the recovery is not yet sufficient that employers are feeling confident about hiring staff back on.

Germany is the economic powerhouse of Europe and the level of unemployment their has fallen from 7.6 to 6.9% which is suggestive of increased employer confidence. The recovery will kick in in the most dynamic economies first. Unemployment in Spain is still languishing at the 20.3% mark.