Unemployment Rate 2012: Euro Zone Unemployment Hits Record High

Eurostat, the European Union's statistics agency, declared in a report on Monday that in August, 18.2 million people were out of work across the 17 countries that share the euro currency bloc; the highest unemployment numbers since the data series started in 1995.

The figure was much higher in the wider 27-nation European Union, with 25 million people without a job, the European Union agency said.

"Compared with August 2011, unemployment rose by 2.170 million in the EU and by 2.144 million in the euro area," the agency said.

For now, a new study by accounting firm Ernst & Young suggested that unemployment could rise to 19 million in the euro zone by early 2014, or about 12% of the work force. It also said that the jobless rate would increase to 27% in debt-stricken Greece, compared with 24.4% in June.

"In this difficult environment, companies are likely to reduce employment further in order to preserve productivity and profitability," the Ernst & Young said.

Economists note that the very spending cuts that are intended to ease the financial crisis by lowering public debt are what's pushing unemployment higher and threatening the continent with recession. Some experts urge leaders to instead loosen spending to encourage growth.

Many European countries like Greece, Spain and Italy have very little room in their budgets for such a stimulus. Greece, for instance, is already relying on a European bailout to pay its bills and its rescue creditors are pushing for more cuts, not spending.

Greece and Spain have the highest unemployment rates in the euro zone, around 25% for both.

Other economists say that the labor market reforms these countries are pushing through will eventually get them back on the path to economic growth. The question is merely how bad it will get before that happens and whether the governments will be able to stay the course in the face of widespread popular protests. This past weekend, tens of thousands of people poured into the streets of Madrid, Lisbon, and Paris this weekend to protest austerity. In Spain, the demonstration descended into violence, as protesters clashed with riot police.

Howard Archer, the chief economist for HIS Global Insight, said it will take some time before Europe’s labor market rebounds.

"There looks to be a very real danger that the euro zone unemployment rate could reach 12% in 2013," he said. Archer thinks that will be the high-water mark, hit somewhere around the end of next year.

In general, European countries outside the euro zone are faring slightly better than those inside. Britain's unemployment rate in June, the latest available figure, was 8%.

For all 27 countries in the EU, the unemployment rate for August held steady at 10.5% after the July rate was also revised and pushed slightly up.