Euro Area: Unemployment rate ticks up in July, again held down by short-time work schemes
Labor market conditions in the common currency block deteriorated again in July alongside the relaxation of some Covid-19 containment measures; however, data released by Eurostat continues to show only a small portion of the deterioration. The number of unemployed people jumped by 344,000, and the unemployment rate edged up to 7.9% in July from 7.7% in June.
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 July, including France, Germany, Italy and the Netherlands. Meanwhile, Cyprus, Luxembourg and Malta saw their unemployment rate falling.
Disparities in the labor market among core and periphery countries persist. Greece is the economy in the Eurozone with the highest unemployment rate (17.0%, data refers to May), followed by Spain (15.8%). At the other end of the spectrum, Malta (4.1%), Germany (4.4%) and the Netherlands (4.5%) have the lowest unemployment rates.
Commenting on the release, Bert Colijn, Eurozone senior economist at ING, stated:
“As short-time work schemes are being extended at the moment, it is likely that the unemployment rate will continue to creep up at a very subdued pace for quite some time. This provides a comfortable cushion against income declines and negative second round effects on the economy but still, the direction of unemployment is up.”