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Italy’s unemployment rate saw a significant increase in May, rising sharply to 6.5% from a revised 6.1% in April, according to data released on Wednesday by the national statistics bureau, ISTAT. The increase in the jobless rate was largely attributed to a surge in the number of people who had previously been inactive entering the labor market to search for work, a trend observed during the month of May.
Despite the rise in the unemployment rate, Italy managed to create a net total of 80,000 jobs in May, showing that the labor market was still able to generate employment. However, the 6.5% jobless rate was the highest since June of the previous year, and well above the forecasted figure of 6.0%, according to a Reuters poll of nine analysts.
The rise in unemployment in May was also partly due to an increase in the youth unemployment rate, which surged to 21.6%, up from 19.9% in April. This demographic, made up of job-seekers between the ages of 15 and 24, has been consistently facing challenges in securing employment, despite the overall job growth.
Employment Growth Shows Positive Trends
In more positive news, the March-to-May period saw employment increase by 93,000 people, or 0.4% compared to the previous three months. Furthermore, the number of employed individuals was up by 408,000 compared to the same month last year, reflecting a 1.7% increase in year-on-year employment.
The employment rate also saw a modest rise, increasing to 62.9% from 62.8% in April. The “inactivity rate”, which measures people neither working nor looking for work, fell to 32.6%, a slight decrease from the previous month’s rate of 33%.
Weak Economic Growth and Stagnant Wages
Despite the positive growth in employment, Italy continues to struggle with weak economic growth and stagnant wages. The country’s gross domestic product (GDP) grew by just 0.7% in each of the past two years, and the government has projected a meager 0.6% growth in GDP for this year.
This prolonged period of slow growth, combined with rising unemployment among the youth population, has created an ongoing challenge for policymakers. Italy’s labor market continues to face structural issues, which have been exacerbated by the country’s low economic growth rate and sluggish wage growth.
As the nation works to address these challenges, the rise in unemployment in May signals that Italy’s recovery in the labor market is still vulnerable to broader economic trends.
