Europe’s Main Economy Overwhelmed by Record Unemployment

By Marko Vidrih on The Capital

Unemployment that hit Germany in May, reaching a record high over the past four years. The number of unemployed increased by 238 thousand and amounted to 2.8 million, writes Bloomberg with reference to the Federal Labor Agency of the country.

Unemployment increased from 5.8 to 6.3 percent compared to April. This is the highest level since December 2015. IAB economists predict that three million citizens may be left without work during the year. More than seven million people, according to agency estimates, receive government subsidies to compensate for their reduced working hours. About a third of them are employed in the service sector, which has been hit hard since restaurants, shops and hotels were forced to close.

Detlef Scheele, head of the labor agency, said the labor market is still under great pressure due to the coronavirus pandemic. According to the Munich Institute for Economic Research (Ifo), the business climate index in Europe’s main economy rose to 79.5 points in May after 74.2 points (seasonally adjusted) in April. However, most companies still expect the situation to worsen.

To save the economy, the German authorities plan to allocate additional assistance in the amount of 50 to 100 billion euros. Earlier, the government directed 156 billion euros to support the economy, it was also decided to create an Economic Stability Fund in the amount of 600 billion euros. According to experts, the fall in GDP in 2020 may reach 6.3 percent.

Author: Marko Vidrih

Featured image credit: Unsplash

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