Unemployment in the eurozone is a problem that will need to be addressed soon. According to a report by Kotak Securities, the unemployment rate hit 11.1 percent in May (17.56 million), the highest on record for the bloc. And, going by the look of things, it does not seem like it will get any better soon with the International Labor Organization warning that unemployment will rise to almost 22 million in the next four years across the 17 countries sharing the euro, unless more is done to help small firms and youth.
Kotak says that the steps being taken by the ECB and governments were no game changers and that they would only provide short term respite. ” It would be wrong to think that the Eurozone crisis is over or the worst has passed. This is because the very incremental nature of decision making means that the next leap forward will require market stress in order to align differences amongst the 17 Euro zone political leaders. The recent EU Summit is just one more step along a very long road for a solution to the crisis. More importantly, global macro momentum has weakened considerably and it would be a major headwind impeding further gains”.
The economic health of the eurozone nations is a continuing cause of concern. While Spain has said its economy will contract in Q2 more than the first quarter, France has cut its GDP growth forecast for 2012 and 2013 to 0.3 percent and 1.2 percent respectively. Among the Eurozone countries, Spain is one of the countries with the highest (24.6 percent) unemployment followed by Greece (21.9 percent), Portugal (15.2 percent).