Unemployment in Eurozone

Eurozone - Unemployment

Unemployment edges down to an almost 12-year-low level ahead of coronavirus blow

Labor market conditions in the common currency bloc strengthened in February, ahead of an inevitable worsening due to the pandemic, according to data released by Eurostat. The number of unemployed people decreased by 88,000, and the unemployment rate dipped from 7.4% in January to 7.3% in February. The figure represents the lowest unemployment rate since March 2008.

Looking at the countries with data available, 10 economies saw their unemployment decline in February, including France, Italy and Spain. In contrast, Austria saw its unemployment rate rise, while the rest of the bloc saw unchanged labor market conditions—including Germany.

Despite a large overall improvement in the Eurozone over recent years, disparities in the labor market among core and periphery countries persist. Greece is the economy in the Eurozone with by far the highest unemployment rate (16.3%, data refers to December), followed by Spain (13.6%). At the other end of the spectrum, the Netherlands (2.9%), Germany (3.2%) and Malta (3.3%) have the lowest unemployment rates.

Commenting on the release, Bert Colijn, Eurozone senior economist, stated:

“Modest wage growth kept labour attractive even as GDP growth remained sluggish over the past few years of recovery. This is likely the lowest rate seen for a while though, given the inevitable impact of the euro crisis. Retaining workers has been a key focal point of most eurozone countries in their fiscal measures to counter the economic fallout from the pandemic, which also helps to cushion the initial blow to employment. Still, a rise in unemployment is inevitable. The real question is will policy be abe to successfully limit the increase.”

FocusEconomics Consensus Forecast panelists expect the unemployment rate to average 8.8% in 2020, which is up 1.3 percentage points from last month’s forecast. For 2021, the panel expects the unemployment rate to average 8.4%.