Jobless Rise Dashes Europe's Upturn Hopes
As fresh statistics in both Europe and the US dash hopes for an early economic recovery, Brussels is proposing micro loans to small firms in a bid to help them keep local jobs.
According to data published by Eurostat, the EU's statistical office, on Thursday (2 July), the jobless rate in the eurozone was 9.5 percent in May, up from 9.3 percent in April. It is the highest rate since May 1999 and it involves around 15 million men and women.
Meanwhile, the unemployment rate across the bloc was 8.9 percent in May, a four year high. The number of jobless persons increased by 385,000 compared to the previous month and by 5.1 million since May 2008.
Altogether, it is expected that some 3.5 million jobs will be lost this year across the EU.
Spain continues to feature as the member state with the highest unemployment rate, while the Netherlands recorded the lowest rates (3.2%) and, along with Germany, the lowest surge of the number of unemployed compared to last year.
While all the EU countries recorded some increases, the three Baltic states saw the biggest jump in jobless figures, with Estonia's unemployment rate surging from around 4 to 15.6 percent, Latvia's from 6 percent to 16.3 percent and Lithuania's from 5 percent to 14.3 percent.
A similar set of gloomy statistics came from the US on Wednesday, as June figures showed that the unemployment rate in the world's biggest economy rose from 9.4 percent to 9.5 percent, its highest for nearly 26 years, the Financial Times reported.
US president Barack Obama admitted the job figures are "sobering" but insisted that his stimulus programme is working. "As I've said from the moment that I walked into the door of this White House, it took years for us to get into this mess, and it will take us more than a few months to turn it around," the US leader said, according to the Washington Examiner.
Economists argue that the latest signals from the labour market on both sides of the Atlantic cast a shadow over optimistic expectations for the world's worst economic recession since the 1930s to be nearing its final phase.
Giving out loans before leaving the officeMeanwhile, the outgoing European Commission, the EU's executive, has proposed a fresh initiative aiming to help preserve employment, suggesting micro loans for small firms as well as for Europeans who have lost their jobs and want to start their own business.
Pointing out that the financial crisis has dried up credit to entrepreneurs, the commission suggested on Thursday (2 July) an initial sum of €100 million to be provided to people willing to set up their own firm.
"In the current recession, we want to offer a new start to the unemployed through easier access to credit to set up or develop new businesses. And we want to help small businesses to develop further despite the crisis," said the employment commissioner Vladimir Spidla. "This will help create new jobs," he added.
If leveraged to €500 million in co-operation with international financial institutions such as the European Investment Bank as expected by Brussels, the initiative could result in 45,000 loans over a period of up to eight years.
Under the proposed scheme, loans under €25,000 would be offered to micro-enterprises, employing fewer than 10 people—which is the prevailing type of business in Europe, covering over 90 percent of all firms, as well as to unemployed or inactive persons planning to go into self-employment.
The EU executive is hoping the programme will start running in 2010.