December Unemployment Figures Belie hopes of a recovery in US, Europe

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Statistics released by the US Department of Labor indicate that a further 85,000 jobs were lost in the last month of the year, with employers laying off an unexpectedly higher number and breaking the trend of declining jobless numbers. In fact, November figures which had earlier indicated a loss of 11,000 jobs in the US now show a correction with a gain of 4,000 jobs. The December loss however indicates unemployment remains at a 10% level.
Taking a cue from the figures, the stock markets have also opened the year on a poor note, and may take time to consolidate. Everyone including the policy makers seem to have been taken by surprise at the sudden reversal of fortunes in the employment markets. The report confirmed that while the pace of job market deterioration has declined markedly in recent months, companies remain reluctant to hire, with the result that scarce paychecks will remain a dominant feature of American life for many months.
Across the ‘pond’, on the other side of the Atlantic, the European Union too played catch up with the US on employment figures with the percentage rising to 10 per cent for the first time since 1998 when the Euro was introduced. The rate of unemployment there has been steadily climbing, from 7.5 per cent in November 2008 to its current level of a little over 10 per cent. Latvia at 22.3 per cent and Spain at 19.4 per cent are the worst-affected of the EU countries. In fact, the unemployment rate for under 25s in Spain is currently around 43 per cent. The lowest rates were in the Netherlands, at just 3.9 percent, and Austria, on 5.5 percent.
Within the EU, Germany and Britian are showing signs of having left the recession but other places are still sunk deep. New job creation even in the countries doing well seems to be a distant thought for employers. The only possible ray of sunshine has been an increase in the number of temporary jobs that employers have in the US, where 47,000 positions were added in the month of December. Economists are taking this as a positive sign that companies are willing to invest in manpower in preparation for the coming turnaround, but are not yet ready to commit themselves to full-time employment hires.
The rise in unemployment numbers has put a lot of pressure on the Obama administration, to show how new job creation is happening from the $787 billion bailout package cleared a year ago. American workers have been unemployed an average of 29 weeks in December, the highest ever recorded since the data was tracked from 1948 onwards. Roughly 4 in 10 workers are jobless for over six months.
Economists estimate that the country needs to create at least 100,000 new jobs every month just to keep pace with the number of workers entering the job market. The November figures had indicated a turnaround, which has proved to be only a false hope as the bleak scenario continues. The story is the same in Europe, where economists say the unemployment rates would be even higher had France and Germany not backed programs to reduce number of working hours rather than the number of jobs.