Week 18, 2012: Euro Area Unemployment

Summary: Figures for March released this week show that unemployment in the Euro Area is at its highest since the Euro was introduced, at 10.9%, but this doesn't reflect the employment situation in all of the constituent countries.

What does the chart show? The chart shows the seasonally adjusted monthly unemployment rate for a number of countries. The unemployment rate is the percentage of people in the labour force (people aged 15 to 74 either currently in, or looking for, a job) without work. The countries shown are Germany (in red), the Netherlands (in orange), Greece (in blue), and Spain (in green). The black line represents the total unemployment rate for the whole of the Euro Area, which has grown over the time period covered by the graph but which now includes 17 countries.

Why is the chart interesting? A record high unemployment rate of 10.9% in the Euro Area suggests that unemployment is a major issue in Europe, but the real problem lies in the divergence of the different labour markets. Until mid-2008, German unemployment was about the same as everywhere else within the Euro Area (with a few exceptions, such as the Netherlands, who managed to achieve consistently low unemployment). However, since then, Germany has started to look more like the Netherlands, while countries like Spain and Greece have unemployment rates of over double the Euro Area average.

This dramatic divergence means that any unified Eurozone response to the unemployment crisis in some of the peripheral countries is unlikely, and this will probably keep Euro Area unemployment rates high in the near future.