'Bleak milestone' as eurozone unemployment hits 12%

UNEMPLOYMENT in the eurozone hit 12 per cent in the first two months of the year, a record level described by analysts as "another bleak milestone".

The jobless rate in the 17 member countries that have adopted the euro as their currency rose to 12 per cent in February, and the January figure was revised up to the same level, from the 11.9 per cent estimated earlier. A total of 19.07 million people were out of work in the eurozone in February, a rise of 33,000, the Eurostat agency said.

The 22nd increase in unemployment in a row means the current labour market downturn in the eurozone is the most prolonged since the early 1990s. Across the wider, 27-country EU the total number of jobless stands at 26.3m, which is also a record.

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The bad unemployment numbers, and the suggestion the eurozone is struggling to emerge from recession, caused the euro to fall against the majority of its 16 most-traded peers today.

The Guardian said the latest unemployment figures show predictions that the eurozone economies would stage a recovery this year appear to be "woefully wide of the mark". Instead, the continent seems to be "locked into a spiral of declining manufacturing output and rising unemployment".

Greece was the worst hit with a jobless rate of 26.4 per cent, closely followed by Spain, where 26.3 per cent of the work force was unemployed in January and February. Austria and Germany continue to lead the eurozone in terms of employment, with just 4.8 per cent and 5.4 per cent out of work respectively.

Europeans have been "transfixed" by the financial meltdown in Cyprus, but burgeoning unemployment in the eurozone is a "potentially bigger crisis", says the New York Times. It also stands in "stark contrast" to the US, where unemployment in February declined to 7.7 per cent, the lowest level since late 2008.

Mark Cliffe, chief economist at ING Group, told the paper that spending cuts and tax increases designed to cut debt in "bailed-out eurozone countries" were "feeding off" rising jobless rates. "It's a bit of a vicious circle," he said. "Europe is pursuing a policy that is self-evidently failing."

Analysts say the short-term economic outlook remains bleak, reports the BBC, because many governments are continuing to "cut spending and raise taxes as they struggle to control high deficits and rising debt levels".