The number of unemployed people in Spain passed the five-million mark in the fourth quarter of 2011, according to government figures.
The country’s National Statistics Institute reported that 5.27- million people were jobless at the end of December, up from 4.9 million in the prior quarter. That translated into an unemployment rate of 22.8 percent, the highest such level in almost seventeen years.
Spanish unemployment, the highest in the Euro zone, is almost at a rate almost double the average of the 17-nation currency bloc (which was at 10.3 percent in November).
Joblessness has particularly struck Spanish youth – nearly half (48.6 percent) of people between the ages of 16 and 24 are now without work.
If the unemployment picture was as bad in the United States as it is in Spain, then there would be roughly 34-million Americans out of work.
The horrid economy swept the Socialists from power late last year, giving the conservative Popular Party a resounding victory and a mandate to fix the jobless problem. However, the new Prime Minister Mariano Rajoy has warned the country will have to take some bitter medicine – including budget cuts, labor reforms and higher taxes.
As in Greece and other battered Euro zone economies, unions have vowed to stage national strikes against the government’s austerity measures.
Tom Burridge, a BBC correspondent in Madrid, wrote: “Rising unemployment is a double blow for the relatively new administration of Mariano Rajoy. The more people who are registered as out of work, the more the Spanish government has to pay out in unemployment benefits. And fewer people in work means fewer people paying income tax, so less revenue for the government. On top of that, if people are not earning then they spend less and that is driving Spain into recession.”
Finance Minister Luis de Guindos told Bloomberg TV that unemployment was the main source of vulnerability of the Spanish economy—it's something we hope to start to fix.
Burridge added: “Unemployment has been high ever since 2008, when Spain's housing boom burst and thousands of people working in the construction industry were laid off… The last time I went to talk to people at a job centre in Madrid, people were waiting outside because there weren't enough chairs inside.”
Meanwhile, the Spanish economy is expected to slide into recession this year – the Bank of Spain predicts GDP will contract by 1.5 percent in 2012, making Rajoy’s pledge to reduce the budget deficit to 4.4 percent of GDP a seemingly impossible task.
Raj Badiani, an economist at IHS Global insight said the grim jobless news raises concerns about Spain’s ability to find any kind of solutions to its deep economic malaise.
“The mix of still dismal employment prospects in conjunction with a surprisingly stable labor force points to an unemployment rate above 22 percent for most of 2012,” he wrote.
“Continuous employment losses are likely to prevail throughout 2012. The austerity measures are cutting into the number of public-sector jobs, while private-sector employment will fail to pick up the slack.”
Badiani further warned: “Clearly, [Spanish] firms are not even close to the point where they can start hiring again, with positive employment intentions delayed until the economy has navigated through its latest setback and is able to generate a stronger and more balanced recovery. “
He added: “Spain could be fast approaching the tipping point where it decides to ease the fiscal brake in order to prop up the labor market in the short-term, which will be squeezed further during 2012 as the recession tightens its grip on Spain and the impending reform of existing employment protection legalization results in more profound job losses in the short-term.”
Palash has worked as a business journalist for 21 years in New York.