Greece's jobless rate hit a record high in May, driven by austerity measures which have plunged the economy into a deep recession.

Data from national statistics agency Elstat today showed unemployment rose to 16.6 per cent from 15.8 per cent in April as job cuts in the wider economy outweighed a rise in seasonal tourism.

The reading was sharply higher than in the same period last year, when it stood at 12 per cent. Greek unemployment figures are not adjusted for seasonal factors.

The young continued to be the hardest-hit, with the jobless rate in the 15-24 age group reaching 40 per cent, twice as high as in May 2008.

The debt-choked country is in its third year of recession, with employment taking a hit as companies shed jobs and many shops close.

"Employment is shrinking at the fastest annual rate ever recorded because of increased uncertainty amid the ongoing recession," said Nikos Magginas, an economist at National Bank of Greece.
"Despite an improvement in tourism, it is hard to see a significant reversal in the upward trend for unemployment in the coming months," said Mr Magginas, who expects the rate to exceed the 17 per centmark at the end of the year.

The Greek economy contracted at an annual pace of 5.5 per cent in the first quarter. Second quarter figures are due tomorrow, with economists predicting a quarter-on-quarter contraction of 0.9 per cent.

As well as fuelling unemployment, the recession has also hit government revenues, causing the central government deficit to widen by a quarter in the first seven months of the year, data showed yesterday.

A record 822,719 people were without work in May, 37 per cent more than in the same month last year.

The number in work dropped to a record low of 4,131,528, down 6.8 per cent year-on-year.

Rules that make it hard to hire and fire workers have helped make joblessness among the Greek young more than 15 percentage points higher than the euro area average, according to OECD figures.

Pressured by its international backers under an EU-IMF bailout agreed last year, Greece has taken steps to make its labour market more flexible.

They include introduction of salaries below the minimum wage for people getting their first job, wage bargaining at an individual company level and the softening of collective dismissal rules at larger companies.

The average jobless rate in the 17 countries sharing the euro held steady in May at 9.9 per cent.