Last week, the European Commission, the EU's executive arm, forecast that that the eurozone unemployment rate was likely to rise further this year and average around 12.2 percent for the year as a whole.
Even if growth does emerge in the eurozone, as some recent economic indicators have suggested, it usually takes time for unemployment to start falling â¿¿ it is widely considered to be a lagging indicator. And high levels of unemployment make it even more difficult for economies to recover and for governments to get their public finances into shape.
Even though concern in the financial markets over the eurozone's problems of too much government debt has calmed recently, there appears to be a rising groundswell among people against austerity, which has been prescribed as the main cure. The inconclusive Italian elections were just the latest manifestation of that protest â¿¿ others include regular protests in Spain and Portugal, as well as the rise of right-wing extremists in Greece.
"High and still rising unemployment rates are probably the single most important threat to the mid to long-term economic stability of the eurozone," said Marie Diron, senior economic adviser at Ernst & Young. "As electorates fail to see the benefits of fiscal and economic reforms, we could see rising social tensions weakening governments and raising the possibility of a popular vote to exit the euro. In this context, it is essential to emphasize growth-enhancing reforms."The overall unemployment rate masks huge divergences across the eurozone. While Greece and Spain languish under the weight of mass unemployment of over 25 percent, many of the northern economies are operating with relatively low levels around the 5 percent mark. Germany's jobless rate stands at only 5.3 percent, while Austria's is only 4.9 percent even after a second straight monthly rise. Though a marked change in austerity is unlikely to be welcomed in financial markets, let alone in Berlin or Brussels, those Europeans unable to find work may get some relief if a reported fall in inflation prompts the European Central Bank to cut interest rates again.