In a sign that the recession in Greece is taking its toll, unemployment surged to a multi-year high in October and is forecast to go higher this year, raising fears that it could fuel social tensions.

More than 56.000 people joined the ranks of the unemployed in October compared to a month earlier.

That’s an increase of about 193,000 on October 2009.

This took the unemployment rate to 13.5 per cent, from 12.6 per cent in September, according to the Hellenic Statistics Authority.

“The rise in unemployment is in line with the macroeconomic environment and is evolving according to the economic programme,” said Platon Monokroussos, head of financial markets research at EFG Eurobank in Athens. “It is certain it will go even higher in 2011.”

Unemployment among women, which rose to 17.6 per cent in October 2010 from 13.7 per cent in October 2009, continued to be much higher than that among men, which rose to 10.6 percent in October 2010 from 7.1 per cent in October 2009.

The hardest hit age bracket, however, was youth (15-24), which reached 34.6 per cent in October 2010 from 27.5 percent in October 2009.

The regions of Greece hardest hit by unemployment were Western Macedonia (17.2 per cent, up from 9.3 percent in October 2009), Eastern Macedonia-Thrace (15.4 per cent from 9.8 per cent) and Central Macedonia (14.8 per cent from 10.1 per cent).

The 12.2 per cent average unemployment rate forecast for 2010 is expected to rise to 14.3 per cent in 2011, before peaking at 15 per cent in 2012, according to the updated memorandum agreed to with the EC, the ECB and the IMF.

Unemployment is expected to go up this year and perhaps in 2012, despite projections for a pick-up in economic activity to 1.1 per cent.

But the medium-term employment prospects are more favourable, due to the flexibility introduced into the labour market by recent reforms, such as wage setting at company level and the expected opening up of several professions to competition.

Nevertheless, the steep rise in unemployment and the gloomy forecasts for 2011 have raised concerns about the prospect of social unrest.

Reform fatigue and social tensions are seen as the biggest threat to successful implementation of the economic austerity programme.

Source: ANA, Financial Times