By: Dr. Mike Campbell
The Eurozone set an unfortunate new record for unemployment within the 17 member bock in January. 10.7% of the workforce found themselves without a job in January; an increase over the December figure by 0.1% - the original December figure of 10.4% having been revised upwards to 10.6%. Since creation of new jobs always follows the end of an economic downturn, it suggests that the anaemic recovery still hasn’t gathered enough steam to create significant numbers of new jobs.
Of course, uncertainty generated by the on-going sovereign debt crisis in Europe is also not conducive of creating the confidence needed to engage new workers. However, with the second Greek EU/IMF bailout looking like a done deal and the yields on Spanish and Italian bonds falling back to more reasonable levels, it seems that the crisis phase may have passed – at least for the time being.
The Eurozone shares a common currency, but economic strength and weakness within the block is, of course, very varied and this shows up in the unemployment figures. Italy is experiencing its highest level of unemployment since monthly records began with 9.2% of the workforce idle. Unemployment is the worst seen since Q1 2001 as urgently needed austerity measures begin to bite and the nation endures its second recession in four years.
The Spanish would be envious of the Italian situation since it has unemployment of 23.3%; the worst level in the bloc. On the positive side of the balance sheet, unemployment in Germany is falling. This is good news since Germany is regarded as the economic heart of Europe and therefore will be the first economy to pick-up when any recovery kicks into gear. Austria, with unemployment at just 4%, has the highest proportion of its workforce in employment.