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Latino Daily News

Tuesday January 3, 2012

Unemployment in Spain Reaches Record High

Unemployment in Spain Reaches Record High

Photo: Unemployment in Spain Reaches Record High (Valencia seen here.)

Click Here to Enlarge Photo

Spain ended 2011 with record high unemployment, according to data released Tuesday as the new conservative government of Prime Minister Mariano Rajoy studied additional austerity measures to reduce the budget deficit.

The “bad and negative” unemployment figures place the future of the welfare state in question, Economy Minister Luis de Guindos said.

More than 4.42 million Spaniards were out of work at the end of 2011, an increase of 7.86 percent over December 2010 and the highest total since 1996.

The statistics confirm “the deterioration of the economic situation in the second half of the year,” the secretary of state for Employment, Engracia Hidalgo, said.

Spain’s unemployment rate, nearly 22 percent, is the highest in the developed world and more than 45 percent of Spanish youth are without jobs.

The 2011 unemployment report comes less than two weeks since Rajoy took office pledging to make job creation a priority.

In pursuit of that goal, the Popular Party leader urged Spain’s unions and employers’ associations to agree by the end of this week on a new overhaul of labor law.

The government would prefer to achieve the reform through an accord with business and labor, but if that proves impossible, the administration has a responsibility “to act,” Hidalgo said Tuesday.

Spain’s two largest labor federations, the UGT and the CCOO, say what is needed to create jobs are policies to spur economic growth, not additional changes to employment law.

The economy’s dim prospects give employers no reason to hire new workers, the unions said Tuesday.

Anger over persistent high and rising unemployment played a major role in the PP’s landslide victory over the incumbent Socialists in the Nov. 20 elections.

Rajoy’s government introduced last week a tough austerity package of 8.9 billion euros ($11.5 billion) in spending cuts and an across-the-board increase in personal income tax.

The plan also includes a continued freeze on civil servants pay - already cut by an average of 5 percent in 2010 - and a freeze on Spain’s minimum wage, which, at 641 euros ($824) a month, is among the lowest in the European Union.

The government will adopt additional austerity measures at this week’s Cabinet meeting, De Guindos said Tuesday, though he ruled out a hike in value added taxes.

De Guindos, a former Lehman Brothers investment banker, said the spending cuts and tax increases announced last week are seen by the financial markets as a sign of the Spanish government’s commitment to reduce the deficit and pursue “aggressive” structural reforms.

The PP administration has justified the stringent austerity by citing figures that show Spain had a cumulative public sector deficit last year equal to 8 percent of gross domestic product, not the 6 percent of GDP forecast by the previous Socialist government.