Winter of Discontent Looms for PIIGS: Goldman Sachs
In the note on Europe, Goldman Sachs analysts said high unemployment in peripheral Europe is partially due to a correction in the value of "labor share", the fraction of income that accrues to labor in the form of wages.
"The recent sharp rise in unemployment rates in the periphery is partly a consequence of a rise in labor shares during the first decade of monetary union," the analysts wrote.
"This resembles the adjustments made in the U.K. and elsewhere during the 1980s."
The analysts said that Portugal, Spain, Italy and Greece benefited from investment booms in the early years of the currency union, which boosted employment and real wage growth. In the aftermath of the financial crisis, these countries must make a "painful labor share adjustment" to lower wages and higher unemployment, in common with the U.K. of the 1980s.
Euro zone unemployment reached 11.8 percent of the working population in November 2012, the highest level since the euro was introduced in 1999, according to Eurostat, the EU's statistics office. However, unemployment is sharply higher than the euro zone average in some of Europe's peripheral countries, running at around 25 percent in both Spain and Greece.
-By CNBC's Katy Barnato