Greece's unemployment rate jumped to 12.1 percent in February, its highest in at least six years, and is expected to rise further as a result of Athens' plans for tough austerity to slash debt.
Greece's jobless rate is the fourth highest in the 16-member euro zone after Spain, Slovakia and Ireland and 2.1 percentage points above the bloc's average in February. [ID:nLDE62U11Y]
Official data showed a sharp deterioration in the labour market from February last year, when unemployment was 9.1 percent. Another 154,000 people lost their jobs over the year, a 34.2 percent increase in the officially unemployed to 605,277.
Investors are closely watching public reaction to government wage and pension cuts agreed as part of a 110 billion euro ($139.7 billion) EU-IMF aid deal agreed last weekend, amid concerns that protests and social unrest may jeopardise fiscal consolidation.
Public and private sector unions will stage a 24-hour nationwide strike on May 20 to protest against austerity measures, stepping up pressure on the government.
Greece's 240 billion euro economy, which accounts for about 2.5 percent of the euro zone economy, shrank by a less-than-expected 0.8 percent in the first quarter but economists expect the recession to deepen as austerity measures to cut deficits take a toll. They forecast the economy will shrink 4 percent this year.
"It is sort of consistent with the big picture of GDP contraction. The more GDP growth remains in negative territory, the wider the output gap and the unemployment rate should be," said Citigroup economist Giada Gianni.
OUTLOOK GLOOMY
Gianni said belt tightening was likely to have a bigger impact on economic activity in the following quarters, driving unemployment higher.
"I expect GDP to continue falling at a faster pace compared with what we've seen up to now, so the jobless rate should continue to increase," Gianni said.
Sectors such as construction, retail and manufacturing have suffered the most from the ongoing crisis.
"Unemployment is on a sharp uptrend, mirroring the ongoing shrinkage of activity in key sectors of the Greek economy, such as retail and wholesale trade, construction, manufacturing, as well as in the public sector on the back of austerity measures," said economist Nick Magginas at National Bank.
Since last year major Greek companies, such as cooler maker Frigoglass <FRIr.AT> and Emporiki Bank <CBGr.AT> have been slashing jobs to cope with the slowdown. Others like aluminium products maker Alumil <ALMr.AT> are reducing working hours and pay.
Unemployment hit young people hardest with the jobless rate reaching 32 percent in the 15-24 age group and 15.2 percent for those aged 25 to 34, statistics service data showed.
It was also worse for women, with the jobless rate among females at 15.3 percent versus 6.3 percent for men.
