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A musician plays violin as a couple walks past at a main shopping street outside of an empty closed shop in central Athens, Monday, June 30, 2014. After a crippling six-year recession lopped a quarter off the economy, Greece is expected to return to modest growth by the end of this year, according to many financial experts. The country has relied on international bailouts since it nearly went bankrupt in 2010.(AP Photo/Petros Karadjias)
Eurozone joblessness remains high as economy lags
Unemployment » Stuttering economy unable to produce enough work to cut 11.6% rate.
First Published Jul 01 2014 09:50 am • Last Updated Jul 01 2014 09:50 am

Amsterdam • A full year since emerging from recession, the stuttering economy of the 18-country eurozone is still unable to create enough jobs to make a significant dent in the unemployment rate.

The number of unemployed people in the 18 countries that use the euro declined by a slight 28,000 in May from the previous month to 18.6 million, the statistics office Eurostat said Tuesday. But that was not enough to bring down the jobless rate, which remained at 11.6 percent.

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Though the eurozone officially came out of recession in last year’s second quarter, the jobless rate has fallen only by 0.4 percentage points since then.

Economists said the lack of any real improvement is troubling, despite proclamations by some European politicians that the worst of the continent’s economic crisis is behind it.

"May’s unemployment data highlight that the eurozone’s economic recovery is still too weak to erode the significant amount of slack in the labour market," said Jessica Hinds of Capital Economics in a research note.

Divergence remains strong between the countries of northern and southern Europe: German unemployment was 5.1 percent, while Italy’s was 12.6 percent, Spain’s 25.1 percent, and Greece’s 26.8 percent — though Greece is still reporting March figures.

The situation is only slightly better in the wider European Union, which includes non-euro countries like Britain and Sweden. There, the unemployment rate edged down to 10.3 percent from 10.4 percent the month before.

By comparison, the U.S. unemployment rate was at 6.3 percent in May.

European Central Bank President Mario Draghi has said that among his greatest worries is that high unemployment in the eurozone, a problem for years, becomes entrenched. When a large part of the labor force is out of work for an extended period of time, people fail to gain new skills they need to be productive and help the economy grow.

The ECB last month announced a string of measures to help the eurozone economy and nudge up inflation, which is languishing at a low 0.5 percent rate. But the central bank, which will meet again on Thursday, has stressed that governments should also act to ease unemployment by reforming their economies, cutting red tape and bureaucracy.

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Economist Bill Adams of PNC Financial Services Group said the ECB will likely not act again this week but predicited it "sooner or later will have to confront the uncomfortable likelihood that significantly more action is needed."

Tuesday’s report showed youth unemployment in particular remains a grave problem, at 23.3 percent across the eurozone. It is at crisis levels in southern Europe, with both Spain and Greece showing unemployment rates for people under the age of 25 at over 50 percent.

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