Greek jobless above 25 per cent

Thu, Oct 11, 2012, 01:00

Greece's unemployment rate climbed to more than a quarter of the workforce in July, extending its record high as the country's five-year recession deepened.

The jobless rate rose to 25.1 per cent from a revised 24.8 per cent in June, the Athens-based Hellenic Statistical Authority said today.

The rate is the highest since the agency began publishing monthly data in 2004.

Greece's recession and deepening labour slump has been exacerbated by austerity measures imposed to trim a budget deficit that was more than five times the euro-area limit in 2009.

Prime minister Antonis Samaras's coalition government is hashing out a €13.5 billion package of budget cuts for 2013 and 2014 needed to keep rescue loans from the euro area and the International Monetary Fund flowing.

"The unemployment rate is a lagging indicator of domestic economic activity," said Platon Monokroussos, head of financial market research at Eurobank Ergasias in Athens. "One should expect a further increase in the jobless rate for as long as domestic economic conditions remain depressed."

The single currency has gained 5.8 per cent against the dollar since August 2nd, when the European Central Bank first announced plans to purchase government bonds of distressed nations along with Europe's rescue fund.

Greece's unexpected budget blowout in 2009 triggered a financial crisis that has stunted the region's economy and threatened a currency seen by its founders as permanent.

Spain is considering asking for help and Cyprus is in talks for a lifeline, following Ireland, Portugal and Spanish lenders.

Central Athens was the scene of protests earlier this week when German chancellor Angela Merkel visited the Greek capital as thousands of citizens vented frustration over her perceived role in the country's economic misery.

Some 7,000 police were deployed in the capital, with Dr Merkel's destinations cordoned off.

Police said they detained 217 people and arrested 24. European leaders are struggling to restore investor confidence as austerity measures across the 17-member currency region threaten to deepen an economic slump. At least five euro- member states are already in recession and Germany, Europe's largest economy, is also cooling.

The IMF earlier this week cut its euro-area economic forecasts for this year and next, saying a further escalation of the region's turmoil remains "a major downside risk.

Economists are also growing more pessimistic on the Greek economic outlook, according to a regular Bloomberg survey released today. Greek gross domestic product may drop 3.1 per cent in 2013 and 0.3 per cent in 2014, it showed.

Economists had previously forecast a contraction of 2.2 per cent next year, followed by an expansion of 0.9 per cent.

With the economy mired in recession, companies may continue to eliminate jobs. A breakdown of today's release showed the female unemployment rate was 29 per cent, while the jobless rate for Greeks aged15 to 24 was 54.2 per cent. That's more than double the youth unemployment rate of 24.3 per cent in July 2009, before the extent of Greece's deficit became known, sparking the debt crisis.

The highest regional jobless rate was in Epirus and part of Macedonia in northern Greece, with 27.1 per cent, up from 26.5 per cent in June, the statistical authority said.

Mr Samaras is seeking extra budget savings to qualify for more disbursements of emergency aid from the euro area and the Washington-based IMF. Their loan pledges to the country have amounted to €240 billion since 2010.

"What Greece has been doing in terms of budgetary adjustment is of a historic nature," European Commission president Jose Barroso said today in Brussels. "To have Greece in the euro, I think, is critically important, not only for Greece but also for the euro area."


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