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World Bank sees unemployment weighing down East Europe

In its latest regular economic report, the World Bank stated that the eastern members of the European Union still have difficult times ahead even amid recovery due to unemployment staying high.

The jobless rates in the region rose to about 10% in May, the spike being caused primarily by the three Baltic countries and Slovakia. The average was 6.5% in June 2008, the report said. Unemployment will only start falling in 2011, when the economic improvements compel businesses to restart hiring, while banks remain cautious about extending credit, it said.

The EU’s eastern members should focus on boosting employment among the elderly and women and should raise the retirement age, said Kaspar Richter, the bank’s senior economist for Europe and Central Asia. They should also focus more on creating skilled jobs in bigger numbers, which have been more resilient to job erosion during the crisis, he said.

“The skill issue is going to be an important one going forward,” Richter was quoted by Bloomberg as saying. “Up until the crisis we knew there was a skill shortage in these countries; the crisis hasn’t changed but re-emphasized it.” (BBJ)