EU unemployment steady, but what are the prospects of growth?

Unemployment across the eurozone was held steady in August 2013, a fact that indicates the region’s economy is stabilizing following its longest-ever recession. Nevertheless, there is a big gap between the unemployment levels of  strong economies such as Germany and Austria and Southern European countries which are currently on a bailout plan.

Unemployment in Member States

Among the Member States, the lowest unemployment rates were recorded in Austria (4.9%), Germany (5.2%) and Luxembourg (5.8%), and the highest in Greece (27.9% in June 2013) and Spain (26.2%).

Compared with a year ago, the unemployment rate increased in sixteen Member States, fell in eleven, and remained stable in Poland. The highest increases were registered in Cyprus (12.3% to 16.9%) and Greece (24.6% to 27.9% between June 2012 and June 2013). The largest decreases were observed in Latvia (15.6% to 11.4% between the second quarters of 2012 and 2013) and Estonia (10.1% to 7.9% between July 2012 and July 2013).

In August 2013, the unemployment rate in the United States was 7.3%, down from 7.4% in July 2013 and from 8.1% in August 2012.

Youth Unemployment

In August 2013, 5,499 million young persons (under 25) were unemployed in the EU, of whom 3,457 million were in the euro area. Compared with August 2012, youth unemployment decreased by 123,000 in the EU and by 52,000 in the euro area. In August 2013, the youth unemployment rate was 23.3% in the EU and 23.7% in the euro area, compared with 23.1% and 23.4% respectively in August 2012. In August 2013, the lowest rates were observed in Germany (7.7%) and Austria (8.6%), and the highest in Greece (61.5% in June 2013), Spain (56.0%) and Croatia (52.0% in the second quarter of 2013).

Hopes for growth

Zach Witton - economist at Moody’s Analytics - argued that the unemployment rate will fall only gradually as the weak recovery provides limited support for profit margins, giving companies little incentive to boost hiring.

On the other hand, there are hopes for improvement in Europe’s economy. The economy grew in the second quarter by a modest quarterly rate of 0.3% after contracting for six straight quarters.

Most surveys suggest the eurozone expanded further during the summer months and that the growth will not rely only on Germany, Europe's largest economy. Even Greece is expected to start growing soon.

With growth spread unequally between strong and weak economies and employers remaining cautious about adding workers, Europe cannot yet celebrate economic progress in its region. The pace of European economy’s development is slow but steady.  It is important though to ensure that wealth and prosperity are enjoyed equally by all Member States and that a large part of the EU budget will be spent for development initiatives that would make Europe’s economy more competitive and attractive to foreign investors.