Unemployment in the eurozone is at an all-time high and will certainly go higher, the London Guardian reported.[1]  --  "There are now 18.49 million people without jobs in the 17 countries sharing the euro, European statistics office Eurostat said on Wednesday," Julia Kollewe said.  --  Particularly dismal are unemployment figures for young people:  "Youth unemployment also hit a new high in Spain with 54.2% of under-25-year-olds out of work, up from 53.8%."  --  The sense in France that the government of François Hollande is failing to get a grip on the situation in that country, where the unemployment rate is 10.8%, is growing, the New York Times reported the same day.[2] ...



By Julia Kollewe

Guardian (London)
October 31, 2012


Unemployment in the eurozone has risen to a new high, with Spain recording the highest jobless rate with more than one in four out of work.

There are now 18.49 million people without jobs in the 17 countries sharing the euro, European statistics office Eurostat said on Wednesday, with an extra 146,000 joining the ranks of the unemployed last month.  The jobless rate increased to 11.6% in September, the highest on record, from a revised 11.5% in August.

"With surveys suggesting that firms are becoming more reluctant to hire, the eurozone unemployment rate looks set to rise further, placing more pressure on struggling households," said Ben May, European economist at Capital Economics.

The lowest unemployment rates were recorded in Austria (4.4%), Luxembourg (5.2%), Germany and the Netherlands (both 5.4%), which are near full employment.  Spain (25.8%) and Greece (25.1% in July) had the highest unemployment in the eurozone, while France looks much like Italy (both at 10.8%), with a steady rise in joblessness.  August data for Greece will be published next week, although the true picture is probably worse, as a growing number of Greek workers remain nominally employed but have not been paid for some time.

Howard Archer, chief European economist at IHS Global Insight, said the jobless data was "dismal," adding:  "Eurozone labor markets remain under serious pressure from ongoing weakened economic activity and low business confidence."

Youth unemployment also hit a new high in Spain with 54.2% of under-25-year-olds out of work, up from 53.8%.

Across the whole European Union, 25.751 million men and women were without jobs last month -- an increase of 169,000 from August -- while the unemployment rate stayed at 10.6%.

By comparison, the unemployment rate was 7.9% in the UK, 7.8% in the US and 4.2% in Japan in September.

There was some good news for the eurozone though -- inflation eased to 2.5% in October, from 2.6%.  Energy prices continued to rise, by 7.8%, but by less than the month before, when they climbed by 9.1% year-on-year.  Food became dearer, however, with prices up 3.2% compared with 2.9% in September.

Economists expect the European Central Bank to cut interest rates again before the year is out from the current record low of 0.75% to support the flagging economy, which probably slumped back to recession in the third quarter.


News analysis


By Steven Erlanger

New York Times

November 1, 2012 (posted Oct. 31)


PARIS -- The symbol of the victorious French Socialist Party is the rose, but the bloom is off five months after François Hollande won the presidency, and the petals are blowing around.

Buffeted by a bad economy and rising unemployment, a decent but uninspiring prime minister, Jean-Marc Ayrault, has been left by Mr. Hollande to ride the waves as best he can.  But bosses are angry, workers are angry, and mistakes are mounting, leaving the always disputatious Socialists sniping at their own leaders.

At the Socialist Party’s recent annual congress in Toulouse, there were complaints that economic rigor had gone too far, and that the government should renege on its promises to European allies and the markets to get the budget deficit this year to 3 percent of gross domestic product.

Others complained that Mr. Hollande’s decision to meet the target by raising taxes and freezing spending, rather than cutting it, would throw France into recession, even as growth, so far elusive, would by itself provide more tax receipts and jobs.

The main business lobby, Medef, has warned of more bankruptcies and layoffs, while an association of the top French companies, the Association Française des Entreprises Privées, called for a 30 billion euro, or $38.8 billion, cut in public welfare fees paid by employers over the next two years to try to reduce the weight of taxes and promote competitiveness.  The group also called on the government to cut spending by $77.7 billion over five years, warning that France could no longer afford to have the state producing 56 percent of G.D.P.

The complaints come as a much-heralded report due next week on how to improve French competitiveness -- commissioned by Mr. Hollande in July from Louis Gallois, the former head of the European Aeronautic Defense and Space Company -- is being played down by the government.  Mr. Gallois and Medef want “a competitiveness shock,” in which some social welfare fees now paid by companies would be transferred to the general budget or covered by other taxes.

But Mr. Hollande, who was criticized during the campaign as being indecisive and vague, said that a shock was a bad idea, and that he preferred a gradual “competitiveness trajectory.”

“France is now facing triple challenges,” he said, speaking of steep debt, poor growth, and high manufacturing costs.  Politically, it would be a difficult time to ease taxes on companies by raising them for retirees, but the softening of his promise to provide strong measures to improve competitiveness, and hence employment, disappointed many.

Even Le Monde, on the center-left, asked in a front-page headline on Wednesday evening, “Has Hollande underestimated the crisis?”

There are also questions about leadership.  Mr. Hollande has tried to contrast his style with that of his predecessor, the hyperkinetic Nicolas Sarkozy, but the French, never happy, complain that Mr. Hollande seems somnolent in the face of the economic crisis.  He has also sent mixed messages -- vowing that France will not undergo austerity while raising taxes on companies and the rich, and at the same time trying to show that he is fiscally responsible to the markets and his euro zone allies.

While the markets are for the moment giving France a cautious free ride, middle-class French are giving Mr. Hollande no credit for sparing them, because they do not feel spared, especially since tax brackets are not being adjusted for inflation.

Perhaps worse, his ministers have shown little discipline in their public comments, sometimes contradicting government policy and sometimes just thinking aloud.

Mr. Ayrault, for example, caused a huge stir when he suggested this week that one of the holy commandments of the party, the 35-hour week, introduced by the Socialists in 2000, might be reviewed.  Asked about restoring the 39-hour week during a meeting with readers of the newspaper Le Parisien, he said:  “Why not? There is no taboo.”

His remarks prompted a furor within the party.  There was quick backtracking, and Labor Minister Michel Sapin, who is close to Mr. Hollande, was brought forth to declare, “The 35-hour week must not be abolished.”

Laurence Parisot, who heads Medef, said that if Mr. Ayrault raised the subject, “it’s because he knows, in a confused way, that there’s a problem.”

The right, in the midst of its own fight over Mr. Sarkozy’s successor as party president, was quick to pounce, damning Mr. Ayrault with faint praise.  Jean-François Copé, a candidate to lead the party, the Union for a Popular Movement, said he “applauded” Mr. Ayrault for “reviving the program” of the right to end the 35-hour week.  Mr. Copé’s opponent, the former prime minister François Fillon, accused Mr. Ayrault of lacking authority and said he had been “cut down to size by his labor minister.”  In the meantime, speculation rises as to whether Mr. Sarkozy will choose, in time, to re-enter politics and run again.

Mr. Ayrault, a former German teacher, jumped the gun by announcing a constitutional court decision -- before the court had a chance to -- that disallowed a Socialist bill to increase public housing.  The bill was disallowed on procedural grounds because of an improperly quick legislative process, a misstep attributed to the government.

The government has also run into trouble with some of its campaign promises, including efforts to legalize gay marriage, which has stirred a protest among religious leaders, and to allow foreigners to vote in local elections.  Mr. Hollande commented dryly, “Gay marriage and the right of foreigners to vote are harder to institute than foreseen.”

There have also been sharp strains with the Socialists’ allies, the Greens, over the future of nuclear energy and a law to set limits on budget deficits and debt.  Most Greens voted against the budget law in Parliament, but Green ministers remained in the government.

Other ministers have taken contradictory public positions with little consequence.  Education Minister Vincent Peillon spoke favorably about decriminalizing marijuana, despite Mr. Hollande’s opposition, earning more derision from the right.  He got a modest put-down from Mr. Ayrault, who said ministers “should defend the policy of their ministry and of the government.  And nothing else.”

Interior Minister Manuel Valls has become popular for his consistency and his toughness, especially against Islamic radicalism and Romanian and Bulgarian citizens, most of them Roma, who overstay their legal residence period in France.  More centrist than many, he has also opposed some Hollande positions.

There have also been spats over policies, which is to be expected.  Finance Minister Pierre Moscovici has disagreed with Arnaud Montebourg, the industrial renewal minister, over how to structure a public investment bank.  Budget Minister Jérôme Cahuzac and Culture Minister Aurélie Filippetti have fought over money and whether to bring back evening advertising on public television.  And there is a new fight about raising the consumption tax on restaurant meals.

The opinion polls show high dissatisfaction with Mr. Hollande.  About 64 percent of the French are unhappy with his government, and only 10 percent think the situation in France has improved since he took office, according to an OpinionWay poll last week for Le Figaro.

Sixty-nine percent of those polled said they were unhappy with the failure to reduce unemployment, at a 13-year high, and 66 percent were unhappy with fiscal policy.  Sixty-eight percent said they thought Mr. Hollande did not know how to show authority, and 63 percent said he could not make difficult decisions.

Mr. Hollande has a five-year term.  But in the meantime, Mr. Sarkozy, tanned and often unshaven, hovers in the wings, silent but hardly forgotten.