Spanish Unemployment Exceeds 3 Million
January 16th, 2009
Spanish unemployment topped 3 million for the first time ever in December and the government said unemployment would worsen in 2009, as the global economic crisis continued to wreak havoc on the country’s property-driven economy.
The number of people out of work in Spain jumped by 139,694 people, the ninth straight month of increases and more than expected, to reach 3.13 million, government data showed on Thursday.
The Labour Ministry’s tally nearly matches totals in much larger economies such as Germany, where the December level was 3.18 million.
Since the same month last year, Spain’s registered jobless has soared by nearly 1 million people or 47 percent as the global credit crunch toppled a decade-long housing boom and hammered spending.
‘In 2009 it will be very difficult, in that unemployment will continue growing due to the fall in economic activity and demand,’ said Employment Secretary General Maravillas Rojo.
Fourth quarter unemployment rate will be reported Jan. 23 by the statistics institute, with the rate expected to rise to over 13 percent from 11.3 percent reported in the third quarter.
Spain’s jobless level compares with 5 million in the United States, which has over seven times more workers, and underscores its over-dependency on construction, easy credit and consumer spending to drive 14 years of rapid economic growth.
Analysts had expected Spanish joblessness to rise sharply in December, as the euro zone’s fourth largest economy entered its first recession in 15 years, but were surprised by the increase which was four times higher than the year-earlier month.
‘This figure was worse than we expected. We’re expecting some bad months, especially in the first half of the year. Right now, it doesn’t look like the situation will get any better,’ said Sergio Diaz Valverde, economist at Caja Madrid.
The government of Prime Minister Jose Luis Rodriguez Zapatero has launched a 10 billion euro public works and infrastructure program to create 300,000 jobs in 2009.
Zapatero has budgeted over 60 billion euros in tax cuts, rebates and low cost loans to boost economic activity.
The stimulus measures will provide only partial relief given analysts’ forecasts Spanish unemployment will rise by over a million to over 4 million by 2010.
Spain’s property-driven service sector has shown the highest level of losses, with a total 1.8 million jobless compared with 591,000 in construction and 400,000 in industry.
Unemployment among immigrants rose 94 percent in the 12 months to December as building sites, households and businesses laid off 411,000 of over 5 million foreigners who flocked to Spain since 1998 in search of work.
Multinational agencies like the International Monetary Fund warn Spain could suffer years of low growth and high unemployment unless it reforms labour laws and develops economic substitutes to construction.
Story from Forbes
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