EC Sees Unemployment at 30-Year High in 1994

The European Community’s deepening recession will push its jobless rate past 12% next year, the highest level in more than 30 years, the trading bloc predicted Wednesday.

That translates to 18 million people without jobs.

The community’s executive agency also forecast that the economy of the dozen West European nations will shrink by 0.5% this year, the poorest showing since 1975.

“The community is in an economic recession,” said Henning Christophersen, the EC’s economics chief.

The downturn has been attributed largely to the world economic slump and a tight money policy in Germany, which has been blamed for forcing up short-term interest rates throughout the EC.

Germany nudged up its interest rates to recoup some of the costs of unifying with eastern Germany. The rates have eased some in recent months.

The community projected that the number of unemployed will surge to 11.5% of the civilian work force this year and more than 12% in 1994. It was 10.1% last year.

A jobless rate of 12% would be the highest since 1960, when the then-3-year-old community began keeping comparable figures. The previous peak was 10.8% in 1985.

Unemployment rates among community members, however, vary widely.

Spain will post an out-of-work rate of a staggering 23% next year, and Ireland’s will surge to 19.25%, according to the projections. But tiny Luxembourg will register a mere 2%.

German unemployment will rise to 10.25% in 1994. It was 7.5% last year. France will see the number of unemployed reach 12% next year.

By comparison, the jobless rate in the United States will be about 6% next year and Japan’s will be just 2.5%.

“In the face of this economic crisis, can Europe find an answer?” asked Belgian Prime Minister Jean-Luc Dehaene.

EC leaders will attempt to answer that question when they gather Monday and Tuesday in Copenhagen for a summit likely to be dominated by economic woes.

“Probably the biggest issue is what can the individual countries and the EC do to come out of this valley of recession and counter climbing joblessness,” German Chancellor Helmut Kohl said earlier in the week.

But prospects for getting the jobless back to work soon appear dim.

The forecast shows the trading bloc pulling out of the recession next year but with only 1.25% economic growth after adjusting for inflation.

“We need rather high growth rates before we will see the unemployment rate . . . go down,” Christophersen said. “We still need to absorb a lot of young people moving into the labor market.”