The latest eurozone unemployment figures, showing an increase of 1m more people out of work, has caused global alarm.
The US sent a message to Germany, urging it to start spending money in its economy to give a vital boost to the eurozone economy.
Employment Commissioner Laszlo Andor, who has been close to a lone voice in demanding immediate action by member states, warned that the numbers of unemployed youth was alarming and the jobless rate threatened a recovery.
German economist Andrew Watt said the unemployment data, especially when viewed alongside the inflation figures issued yesterday, was a “huge red flag” for policymakers and the ECB, and it was time to loosen policy now.
Unemployment in Ireland has fallen to seventh in the EU at 13.6% in September because of the huge increase in unemployment in other countries. The seasonally adjusted EU average is 11% and for the eurozone it is 12.2%, the same as in August, but the figures increased in 16 countries over the past year.
Unemployment in Greece is again the highest at 27.6%, followed by Spain at 26.6%. Numbers out of work rose fastest in Cyprus, which availed of a bailout earlier this year.
Youth unemployment is causing even more concern, at an average of around 24% throughout the EU. At 28%, Ireland’s youth unemployment is the ninth highest with the Greek rate at 57%, followed by Spain at 56.5%.
Socialist Party MEP for Dublin Paul Murphy took issue with the Government, claiming that the drop in the live register was due to emigration or back-to-work programmes, not real job creation.
“Earlier this year, figures showed that someone was leaving the country every 6 minutes, 240 people a day, that’s 7,200 people a month — yet the Government are celebrating a drop of 10,000 on the live register in a month,” said Mr Murphy.
Inflation has continued to fall, 0.7%, and core inflation — when the cost of energy, food, and tobacco is taken out — is 0.8% according to the latest Eurostat figures.
Mr Watt, head of the macroeconomic policy institute in the Hans-Boeckler Foundation, said: “I know of no economic theory or textbook that would call on macro policy to sit on its hands faced with such trends.
“Meanwhile, the US FED continues to buy $ 85bn of longer-term bonds every month. The Bank of Japan has today reiterated a commitment to buy $ 74bn of bonds every month until the end of 2014. Linked to all this, and given the passivity of the European Central Bank, the euro goes from strength to strength, which might sound good but is draining the life out of the euro area recovery.”
Mr Andor said it was crucial that countries pursue proactive employment policies such as hiring subsidies, reduced taxation and social security contributions on low-paid labour, individualised job-search support, and training adapted to employers needs.
He also called on governments to implement the youth guarantee with the support of EU funding while surplus countries should encourage demand through wage increases.
© Irish Examiner Ltd. All rights reserved