The unemployment rate in Greece hit a record 25.1 percent in July, according to official figures released on Thursday.
The Associated Press reported that all indications say unemployment in Greece will only be heading higher. Economic output has slumped by a quarter, and youth unemployment is staggeringly high at beyond 50 percent.
"This is a very dramatic result of the recession," said Angelos Tsakanikas, head of research at Greece's IOBE economic research foundation.
Bloomberg noted that Greece's recession and labor slump have been exacerbated by the austerity measures put in place to cut the budget deficit that was more than five times the euro zone limit in 2009.
Another 13.5 billion euros ($17.4 billion) of budget cuts is being negotiated by Prime Minister Antonis Samaras' coalition government for 2013 and 2014, in order to keep the rescue funds from the International Monetary Fund coming.
European leaders meeting in Brussels next week are considering creating a separate budget for the 17-nation euro zone, which would centralize tax and spending decisions, said the BBC.
Meanwhile, a group of think tanks in Germany have cut growth forecasts for the country and warn of recession. They predict that the German economy will grow only one percent next year, instead of the expected two percent, according to the BBC.
They said the euro zone's crisis, as well as the global economy's slowdown, have hurt business confidence and investment in Germany.
"Should the situation in the euro zone continue to deteriorate, this will also impact the German economy. Over the forecasting period as a whole the downside risks prevail and there is a great danger that Germany will fall into a recession," the report said.
The news comes a day after the S&P lowered Spain's short-term sovereign credit rating from "A-2" to "A-3" and the long-term sovereign credit rating from "BBB+" to a "BBB-" on Wednesday, amid rising unemployment, a deepening recession and the "friction between Spain's central and regional governments."
More on GlobalPost: Standard & Poor's cuts Spain credit rating to near junk status