Record Euro-Zone Unemployment Likely to Rise; Number of Jobless Still a Concern as Other Threats Abate
The rate of unemployment across the 17 countries that share the euro rose to a record in May, and is likely to increase further despite signs that the currency area's longest postwar contraction may be coming to an end.</br></br>High rates of unemployment, particularly , have become the main concern for euro-zone policy makers in recent months as more pressing threats to the continued existence of the currency area have appeared to abate.</br></br>A number of governments have decided to take more time to cut their budget deficits, partly in order to limit the loss of jobs. And European leaders Friday agreed to set aside [euro]8 billion ($10.41 billion) annually in order to tackle high levels of youth unemployment, a figure many economists regarded as far too small.</br></br>But even with an easing in the pace of austerity, and more direct interventions to create jobs, the rise in unemployment is unlikely to come to an end soon.</br></br>"A contracting economy and major fiscal consolidation across the region have been the main drivers of rising euro-zone unemployment," said Anna Zabrodzka, an economist at Moody's Analytics. "Despite signs of improvement, this year will be challenging for euro zone's economy. Unemployment will continue to rise even further because the labor market follows the business cycle with a lag."