Spain’s Unemployment Rate Rises To 26% In Fourth Quarter Of 2012; Over Six Million Jobless

About 6 million people are out of work in Spain as the rate of unemployment rose 1 percent compared to the previous quarter. An estimated 691,700 people lost their jobs last year.

The data showed that Spain now has 1.8 million jobless households. The unemployment rate for the working-age Spaniards under the age of 25 now stands at a staggering 60 percent. Spain’s overall unemployment rate is more than double the European Union average.

Spain is battling the onset of a second recession as the economic growth contracted between 2009 and 2011. A housing-bubble burst left millions of low-skilled workers unemployed, hurting business sentiment, consumer spending and imports. The 1-year-old conservative government has implemented several unpopular austerity measures, including labor reforms intended to cut down expenditure to rein in the ballooning fiscal deficit.

"We haven't seen the bottom yet and employment will continue falling in the first quarter," Citigroup strategist Jose Luis Martinez told Reuters.

In the fourth quarter, the economy shrank by 0.6 percent, at its fastest pace since 2011, the Bank of Spain said Wednesday.

The central bank estimated that economic growth was down 1.7 percent in the fourth quarter on a year-on-year basis, as the private consumption dropped due to tax hikes and wage cuts.