Unemployment is a lagging indicator of the economic cycle in that employers delay making staff redundant until economic conditions force them to do so and they are reluctant to re-employ staff until their order books cannot be fulfilled with their existing human resources. The Eurozone is a bloc of 19 countries but whilst macro-economics are set by the central bank (the ECB) national economic factors mean that there will be considerable (regional) variations within it. This last factor explains why unemployment across the Eurozone is “sticky” at best. Some Eurozone economies have put the Global Financial and Eurozone Sovereign Debt crises firmly behind them and are enjoying near full employment whilst others continue to struggle.
Unemployment in the Eurozone has declined from a peak of 12.1% (April 2013) to stand at 9.5% currently, its best level in almost 8 years (May 2009). It remains uneven with the Czech Republic and Germany close to full employment at 3.4 and 3.9%, respectively, but with Spain and Greece still experiencing very significant levels of unemployment (18 and 23.1%, respectively).
By way of context, the historical average for unemployment in Greece stands at 15.7% between 1998 and 2016 (range 7.3%, May 2008 to 27.9% in July 2013). For Spain, the average unemployment figure is 16.5% (1976-2017) with a low of 4.4% (Q3, 1976) and a high of 26.9% (Q1, 2013). Whilst the unemployment level in Spain and Greece remain unacceptably high, the figures do need to be viewed against the historic average since it forms the baseline upon which performance must be judged – current Spanish unemployment is 1.5% above the average value whilst Greek unemployment remains 7.4% above the historical value, suggesting that much remains to be done.
For the Eurozone as a whole, the historical average unemployment figure is 9.78% (1995-2017), meaning that it has moved to fuller employment than has been historically the case (again, the range is 7.3 to 12.1%).