Greek unemployment rises to 12%
Greece's jobless rate rose back to 12 per cent in July after a brief dip in June, data showed today, and is set to head higher as austerity measures to control the country's huge debt burden aggravate a weak economy.
Unemployment rose from 11.6 per cent in June, back to May's level. It is now almost two percentage points higher than unemployment in the 16-member euro zone, which was revised up to 10.1 per cent in July.
The Greek government expects the jobless rate will worsen to 14.5 per cent next year as the economy suffers its third consecutive year of contraction.
Investors are closely watching public reaction to government wage and pension cuts agreed as part of a €110 billion EU/IMF deal to help Greece stave off the risk of default. There are concerns that protests and social unrest may jeopardise fiscal consolidation.
Economists say a weakening labour market will further deter households - already hit by higher taxes and inflation - from spending.
"Given the weakness of the economy - plummeting activity levels and large spare capacity - we expect unemployment to continue to increase over the coming months," said economist Diego Iscaro at IHS Global Insight.
"This is obviously bad news for the Greek economy," he said.
Greece's €240 billion economy, which accounts for about 2.5 per cent of the euro zone, is expected to shrink by about 4.0 per cent this year and decline by another 2.6 per cent in 2011.
Sectors such as construction, retail trade and manufacturing have suffered the most from the ongoing crisis.
Since last year major Greek companies such as cooler maker Frigoglass and Emporiki Bank have been slashing jobs to cope with the slowdown. Others like aluminium products maker Alumil are reducing work hours and pay.
Data from the Hellenic Statistics Authority (HSA) showed that 130,328 people lost their jobs in the 12 months through July, bringing the total number of officially unemployed to 607,035.
Unemployment has hit young people hardest. The jobless rate reached 32.6 per cent in the 15-24 age group in July and 23.9 per cent for those aged 25-34.
The unemployment rate stood at 9.6 per cent in July 2009.