Euro Area: Unemployment rate inches up in June, again held down by massive short-time work schemes
Labor market conditions in the common currency block worsened again in June, when Covid-19 containment measures started being loosened, although data released by Eurostat continues to show just a small portion of the deterioration. The number of unemployed people jumped by 203,000, and the unemployment rate increased to 7.8% in June from 7.7% in May.
Short-time work schemes involving a massive portion of the labor force across the Eurozone has prevented a jump in the unemployment rate so far. Moreover, discouraged people abandoning the active population are further contributing to contained jobless numbers.
That, said, looking at the countries with data available, 10 economies saw their unemployment rate increase in June, including Germany, Italy, the Netherlands and Spain. Meanwhile, Ireland and France saw their unemployment rate falling.
Disparities in the labor market among core and periphery countries persist. Spain is the economy in the Eurozone with the highest unemployment rate (15.6%), followed by Greece (15.5%, data refers to April). At the other end of the spectrum, Malta (4.2%), Germany (4.2%) and the Netherlands (4.3%) have the lowest unemployment rates.
Commenting on the release, Bert Colijn, Eurozone senior economist, stated:
“The outlook for unemployment is one of subdued steady increases over the coming months. While economies are reopening, many businesses indicate that they are still looking to lay off employees given the substantially lower output compared to the pre-crisis situation. Besides that, more people will return to the job market, and short-time work schemes will start to come to an end in the second half of the year, causing increased risk of further layoffs. Still, the fact that a labour market shock has not occurred at times of historic output loss has been of help in the current phase of economic recovery, which helps the outlook for GDP in the third quarter.”