Euro zone sheds record 1.2m jobs in first quarter of 2009

THE 16-COUNTRY euro zone lost a record 1.22 million jobs in the first quarter of 2009, highlighting the depth of recession and boding ill for any quick turnaround.

The number employed fell 0.8 per cent in the first three months against the previous quarter to 146.2 million, pulled down by job losses in Greece and Spain, the European Union statistics office, Eurostat, said.

Employment during the first quarter fell 1.2 per cent year-on-year, also the steepest annual drop since measurements started in 1995.

“Extended and deep economic contraction, depressed business confidence and deteriorating profitability increasingly fed through to reduce jobs across the euro zone in the first quarter,” said Howard Archer, economist at consultancy IHS Global Insight.

The news came as the head of the International Monetary Fund warned it might be too soon to discuss rolling back stimulus spending, saying the world economy had yet to weather the worst of the recession.

In southern Italy, Group of Eight (G8) finance ministers meeting over the weekend described their economies in the most positive terms since the collapse of US bank Lehman Brothers nine months ago deepened the world’s worst fiscal crisis since the Great Depression of the 1930s.

“Their stance is that we are beginning to see some green shoots but nevertheless we have to be cautious,” IMF chief Dominique Strauss-Kahn said during a visit to Kazakhstan. “The large part of the worst is not yet behind us. We see . . . a recovery toward the beginning of 2010, 2009 is already done, we know it’s a bad year,” he said. “At the global economic level, the growth will be -1.3 , which is the first negative growth since the Depression.”

Eurostat also revised its quarterly employment figure for the last three months of 2008 to a drop of 0.4 per cent from a previously reported 0.3 per cent decline.

Weak job figures, coupled with the prospect of negative inflation, are likely to convince the European Central Bank to keep its main interest rate at a record low 1 per cent for an extended period, or even reduce it, economists say. – (Reuters)