Euro Area: Unemployment rate inches up in May, again held down by massive short-time work schemes
Labor market conditions in the common currency block worsened again in May, the third month marked by COVID-19 containment measures, although data released by Eurostat continues to show just a small portion of the deterioration. The number of unemployed people jumped by 159,000, and the unemployment rate increased to 7.4% in May from 7.3% in April.
Short-time work schemes involving a massive portion of the labor force across the Eurozone prevented a jump in the unemployment rate in April-May. Moreover, discouraged people abandoning the active population further contributed to contain jobless numbers.
That, said, looking at the countries with data available, 13 economies saw their unemployment rate increase in May, including Germany, Italy and the Netherlands. Meanwhile, France and Spain 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 (14.5%), followed by Greece (14.4%, data refers to March). At the other end of the spectrum, the Netherlands (3.6%), Germany (3.9%) and Malta (4.2%) have the lowest unemployment rates.
Commenting on the release, Bert Colijn, Eurozone senior economist, stated:
“In the months ahead, the surprisingly stable eurozone unemployment rate is likely to continue to creep up. This is simply because the economy is unlikely to reach the level of pre-crisis output anytime soon, leading to inevitable job losses especially when short-time work schemes draw to a close.”