Cuts drive Greek unemployment to record high

ATHENS Thu Feb 9, 2012 8:06am EST

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ATHENS (Reuters) - Greece's jobless rate rose to a fresh record of 20.9 percent in November, highlighting the pain imposed by austerity on ordinary Greeks as the country negotiates a new pain-for-gain package with its EU and IMF lenders.

Industrial output also got worse, statistics service ELSTAT data showed, while inflation eased slightly.

"The unemployment rate worsened at a much faster pace than expected, while employment shrank further. The fall of employed people by an annual 9.4 percent in November was shocking," said Nikos Magginas, at National Bank.

"The main reasons behind this deterioration - which is expected to continue until the first quarter of the year at least - are the increased uncertainty over Greek economy's prospects, the prospect of additional austerity and a possible increase in the grey economy."

The young were the hardest hit, with close to one in two of the 15-24 year old unemployed, more than twice as much as in 2008, before the country's severe debt crisis exploded.

Greek labor unions say the austerity is choking the economy and have called a general strike for Friday and Saturday to oppose the new belt-tightening plans. They have stage repeated strikes and protests over the past two years to protest the measures but the government has stuck to the tough path required to get aid.

However, the public spending cuts, intended to avert national bankruptcy, have put pressure on the budget by hammering tax revenues and boosting welfare payments as the dole queues lengthen.

Greek leaders failed early on Thursday to agree on fresh reforms and savings measures, the price of a new bailout to avoid a messy default when bond redemptions come due in March.

Talks stumbled on pension reform but leaders have agreed to cut the minimum wage by 22 percent as part of efforts to fight unemployment and make the economy more competitive, officials said. Plans to scrap holiday bonuses paid to private sector workers had been dropped.

The average jobless rate in the 17 countries sharing the euro rose slightly to a seasonally adjusted 10.4 percent in November from 10.3 in October. Greek unemployment figures are not adjusted for seasonal factors.

Greek industrial output shrank by 11.3 percent in December from 7.8 percent in November, while manufacturing output shrank by 15.5 percent.

Inflation eased slightly to 2.3 percent in January from 2.4 percent in December.

For a graphic on industrial production and GDP click on: link.reuters.com/sut34s

(Reporting by Angeliki Koutantou; Writing by Ingrid Melander; Editing by Anna Willard)

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