Europe Payrolls Shrink by Record 1.22 Million

Europe’s economy lost a record 1.22 million jobs in the first quarter as companies cut spending to survive the worst global economic slump in more than six decades.

Employment payrolls in the 16-member euro region fell 0.8 percent from the fourth quarter, when they declined 0.4 percent, the European Union statistics office in Luxembourg said today. The first-quarter drop was the biggest decline since the data series started in 1995. From a year earlier, payrolls contracted 1.2 percent, the first annual decline on record.

The euro-area economy may struggle to gather strength after shrinking at the fastest pace in at least 15 years in the first quarter. Even as indications mount that the worst of the recession may be over, unemployment is near a 10-year high and forecast to rise more as industries from auto makers to airlines reduce output and staffing to weather the economic crisis.

Continental AG, the second-largest car-parts maker in Europe, said this month that it may fire as many as 2,600 workers in Germany. Air France-KLM Group, Europe’s biggest airline, last month said it will deepen job cuts after reporting its first annual loss since 1996.

The European Commission expects unemployment across the euro region to average 9.9 percent this year and 11.5 percent in 2010, with the biggest increases in Ireland and Spain. The jobless rate is currently 9.2 percent, the highest since September 1999.

While European Central Bank President Jean-Claude Trichet said on June 4 that the region’s economy may be past the worst and return to growth by mid-2010, the ECB forecasts that the euro-area economy will shrink around 4.6 percent this year and about 0.3 percent in 2010.

The statistics office estimates that the total number of people employed in the euro area was 146.2 million in the first quarter. Total employment in the 27-nation EU was 223.8 million.

The fourth-quarter drop in euro-area employment from the prior quarter was revised to 0.4 percent from 0.3 percent estimated earlier.

Europe Payrolls Shrink by Record 1.22 Million, Bloomberg
6/15/2009 9:59:14 AM