Employment situation brightens, but concern about wages remains

File d'attente.

File d'attente.

The number of people out of a job in the eurozone has fallen for the first time in more than two years, the latest sign the bloc may make a muted recovery from recession later this year.

In June, 24,000 fewer Europeans in the single currency area were jobless compared with May, EU statistics agency Eurostat said on Wednesday (31 July), the first decrease since April 2011.

Predictions of a rebound have so far proved illusory as Europe tries to overcome more than three years of crisis.

Indeed, the fall in eurozone joblessness was not enough to bring down the overall unemployment reading for the bloc, which remained at a record 12.1% for the fourth straight month.

More than 19 million people were unemployed in June in the 17-nation region.

Wages a concern

Despite the tentative improvement in eurozone employment, the European Trade Union Confederation expressed concern ahead of Wednesday's figures about the knock-on effects of high joblessness and the austerity measures being pursued by governments.

“Ten months before the European elections, mass unemployment together with wage-cutting policies are a dangerous mix for citizens’ support to the European project,” the ETUC, which represents labour organisations in 36 countries, said in a statement on Monday. “The ETUC warns European leaders: a change of direction is urgently needed to restore growth and confidence.”

ETUI, the ETUC research institute, released a graphic-based wage report showing that in the majority of countries where unemployment has risen, salaries are falling, “with serious consequences in terms of growing poverty risk and social exclusion”.

The eurozone countries with the sharpest wage declines since 2009 were Greece and Portugal – both of which have been propped up by EU-bailouts – along with the Estonia.

Weak consumer spending

Meanwhile, falling spending in June by shoppers in Germany, France and Spain will dampen any early celebrations over improving jobs figures, but low annual inflation – stable at 1.6% in July – means the European Central Bank is able to act if the recovery falters.

Retail sales in Germany, Europe's largest economy, fell by the most this year in June, slipping 1.5%, while French spending fell back in the month from May and missing expectations of a rise.

In Spain, retail sales fell for the 36th month running in June and only 39 fewer people were out of a job in the month compared to May in a country where the unemployment rate, at 26.3%, is second only to Greece in the 28 EU nations.

Talk of a recovery has intensified, however, after eurozone business and economic sentiment indices rose to a 15-month high in July, helped by the European Central Bank's pledge to stand behind the eurozone, as well as a recovering US economy and a lessening of harsh austerity policies.

Positions

A European Trade Union Institute wage report  shows that in the majority of countries where unemployment has risen, salaries are falling.

“What this visual wage developments map is proving is that wages are the principle target of austerity measures across Europe. They clearly became the key instrument or adjustment mechanism through an internal devaluation policy,” Bernadette Ségol, ETUC general-secretary, said in a statement.

“This trend did not solve the “competitiveness” problems, in particular in countries subject to financial bailout schemes. On the contrary, it aggravated existing problems, by affecting the most vulnerable. This is unacceptable and it risks undermining further the already fragile citizens’ support to the European project.”

The European Commission played down any suggestion that European policymakers would be satisfied by the improved employment scene. "The unemployment figures remain horrendously high," Commission spokesman Dennis Abbott told a news conference. "It is up to member states to get their act together and implement reforms to give people the opportunity to get a decent job."

Background

New Eurostat figures show that in June 2013, 5.512 million people under 25 were unemployed in the 27 EU states (Croatia joined the bloc on 1 July). Of them, 3.526 million were in the 17 eurozone countries.

Compared with June 2012, youth unemployment decreased by 43,000 in the EU27 and increased by 43,000 in the eurozone. In June 2013, the youth unemployment rate was 23.2% in the EU27 and 23.9% in the single currency bloc, compared with 22.8% and 23.0% respectively in June 2012.

In June 2013, the lowest youth unemployment rates were in Germany (7.5%), Austria (9.3%) the Netherlands (11.0%) and Malta (11.2%), and the highest in Greece (58.7% in April 2013) and Spain (56.1%).

Further Reading

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