The euro zone unemployment rate rose to 8.9 per cent in December from a revised 8.8 per cent in November to confirm the region's inability to create jobs despite modest growth.
Eurostat revised the jobless rate for the 12-nation single currency area down to 8.8 per cent in November and October from 8.9 per cent. The jobless rates for June and July were also revised down to 8.8 per cent.
Eurostat estimated that 12.6 million people were without jobs in the euro zone and 19.0 million remained unemployed in the 25-nation European Union.
Analysts say rigid labour laws and industrial overregulation hampers job creation in many EU countries, keeping domestic demand in check and stifling economic growth.
The persistent failure of euro zone consumers to open up their wallets leaves the region's expansion dependent on exports and so at the mercy of growth in other countries.
Economists polled by Reuters forecast euro zone growth of 1.8 per cent in 2005. European Central Bank staff have estimated last year's growth at between 1.6 and 2 per cent.
The unemployment rate in the euro zone and the same figure for the EU remain significantly higher than in the United States and Japan, which have jobless figures of 5.4 per cent and 4.4 per cent, respectively.
Eurostat said that the lowest euro zone jobless rates were registered in Ireland at 4.3 per cent, Luxembourg at 4.4 per cent, Austria at 4.5 per cent and the Netherlands at 4.7 per cent.
The highest rate was in Spain at 10.4 per cent. France and Germany, the euro zone's two top economies, saw their unemployment rates increase to 9.7 per cent and 10.0 per cent respectively from 9.6 per cent and 9.9 per cent.
In the 25-nation EU, jobless rates were generally higher in the mostly ex-communist countries that joined the bloc last May, with Poland and Slovakia recording 18.3 per cent and 16.9 per cent respectively.