BRUSSELS (AP) -- Unemployment in the 16 nations that use the euro rose to a new 10-year high of 9.6 percent in August, EU statistics revealed Thursday, stoking fears that a weak labor market will hinder the pace of economic recovery.
Some 15 million people were seeking work in the euro area in August, 165,000 more than in July. The jobless rate is now the highest since March 1999.
Unemployment for all 27 nations of the European Union also rose to 9.1 percent, the worst since March 2004 as 236,000 jobs disappeared from July to August.
EU forecasts say more jobs are likely to be lost in coming months as companies cut costs even as the economy starts to recover.
In July, the unemployment rate was 9.5 percent in the euro zone and 9 percent in the EU.
Spain is the worst affected country with a 18.9 percent jobless rate -- with nearly one in five workers out of a job after the end of a housing bubble and a slowdown in tourism and consumer spending. Nearly two out of five under 25-year-olds cannot find work.
All EU nations reported more unemployment compared to a year ago, Eurostat said, with the smallest increases in Belgium and Germany.
Latvia and Estonia -- two Baltic nations that do not use the euro -- saw the jobless rate surge over the year as they sank into a deep economic downturn triggered by the financial crisis. Latvia's unemployment rate went from 7.4 percent in August 2008 to 18.3 percent in 2009.
The rising number of jobless is a worry for European governments because businesses in the region are slow to hire and fire workers -- meaning some people who lose their jobs may never find another one and will rely on welfare to survive.
Swedish Finance Minister Anders Borg called on EU governments to tackle these longer-term problems with labor markets as finance ministers meet for talks in Goteborg, Sweden.
"We need to boost labor supply, boost labor market flexibility," he told reporters, describing this as a way to boost economic growth.