Spain’s economic crisis continued to take its toll on employment in the second quarter, with the jobless rate edging up to 24.6 percent overall and more than 53 percent among youth.
Those figures - up from 24.4 percent and 52 percent in the previous quarter - mean unemployment in Spain remains the highest among the European Union’s 27 member states, whose average jobless rate is 10.3 percent.
The latest results from the National Statistics Institute’s EPA workforce survey reveal the human cost of the country’s recession-mired economy, as the ranks of the unemployed swelled by 53,500 people between April and June to a record total of 5.69 million.
The statistics are even bleaker considering businesses traditionally take on workers in those months as they prepare for the start of the summer tourist season.
According to the EPA figures, the unemployment rate at the close of the second quarter already reached the level the government had projected for the end of the year.
The figures also showed that the number of households with all its members unemployed rose to nearly 1.74 million, up 370,200 from a year ago.
Deputy Prime Minister Soraya Saenz de Santamaria said Friday that Mariano Rajoy’s administration has no plans to reverse course on the austerity tack it has pursued through since taking office last December, adding that the unemployment figures “have their origin in the recession.”
The government projects that Spain’s economy, already officially in recession for the second time in three years, will contract by 1.5 percent in 2012.
According to projections announced last week by Finance Minister Cristobal Montoro, the country’s gross domestic product will shrink by an estimated 0.5 percent next year before a recovery gets underway in 2014.
In a report released Friday, the International Monetary Fund took a more pessimistic view, forecasting that Spanish GDP will decrease by 1.2 percent next year and continue contracting in 2014.
The IMF revised its projections for Spain after Rajoy on July 11 unveiled his administration’s latest austerity package - including plans for more budget cuts and a hike in the sales tax aimed at shaving 65 billion euros ($80.5 billion) off the national budget deficit.
Those latest measures, which were in line with the IMF’s own recommendations, will increase unemployment and inflation and lead to a drop in consumption, the report said.
The IMF projects that Spain’s unemployment rate will remain higher than 24 percent until 2014 and above 20 percent as far out as 2017.
Rajoy’s government defends the austerity measures, which have included sharply reducing subsidies to the coal sector, saying Spain must bring its budget deficit down to EU-mandated levels before it can start growing and creating jobs.
“Unless we fulfill our deficit objective, there won’t be any way out of the crisis,” Saenz de Santamaria said Friday.
Spanish unions, however, say the rise in the unemployment rate in months when businesses typically increase their hiring is due to the harsh austerity measures.
This month’s approval of the tax hike and budget cuts followed a decision by EU finance ministers to ease Spain’s deficit targets in the coming years.
Spain now must bring its national budget deficit down to 6.3 percent of GDP by the end of 2012, as opposed to an earlier 5.3 percent target. The country must then lower its deficit in 2013 and 2014 to 4.5 percent and 3 percent, respectively.
Spain’s economy has been battered in recent years by the global recession and the collapse of a massive real-estate bubble, which has left many banks saddled with toxic property assets.
The yield on Spain’s benchmark 10-year bond set a new euro-era record on Wednesday due to concerns the country may need an international sovereign bailout like those received by euro-zone partners Greece, Ireland and Portugal, although it fell later in the week thanks to European Central Bank assurances that it will defend the euro at all costs.
A European rescue package has already been approved for Spain’s struggling banks.
Read more by HS News Staff →