Unemployment Plagues Spain, Bankers Ordered To Return Bonuses

 @crvillarreal on October 26 2012 10:40 PM
Mortgage Victims' Platform At Bankia HQ
Members of the Mortgage Victims' Platform stand with signs during a demonstration outside the nationalized Bankia headquarters in Madrid on Friday. REUTERS

Spain’s unemployment rate has climbed to the point where one in four people are out of work as the country’s economic recession continues to deepen.

Unemployment rose to 25.0 percent in the third quarter from 24.6 percent in the second quarter, according to Spain's National Statistics Institute on Friday.

"In the space of just five years, unemployment in Spain has risen from 8 percent to now just over 25 percent," said the BBC News correspondent in Madrid, Tom Burridge the same day. "In parts of southern Spain, one in three of those looking for a job can't find one."

Burridge added: "An increase in the number of people out of work means less money circulating in a recession-hit Spanish economy. It also makes it harder for the Spanish government to balance its finances, as it pays more out in unemployment benefits, and takes less revenue in."

Spain’s government hopes to avoid requesting a second bailout from the euro-zone rescue funds, as it attempts to cut its deficit by implementing more austerity measures. However, such measures have already driven the unemployment rate higher. In June, the country accepted a €100 billion ($129.08 billion) package to prop up its ailing financial sector.

“The situation is serious,” Ricardo Santos, an economist at BNP Paribas SA in London, was quoted as saying by Bloomberg News. “There is still room for a deterioration in unemployment. Activity is weak, and the government will reduce jobs as there are strict targets to adjust the number of public-sector temporary workers, especially in health and education.”

The austerity measures have been extremely unpopular among the public, which is suffering the brunt of the recession, fueling ongoing protests.

Spain's latest announcement of unemployment figures coincided with the Spanish financial conglomerate Bankia saying it will order its executives to return their annual bonuses for last year at the behest of the European Commission, according to the Guardian. Bankia was nationalized by the government in May after reporting it needed a bailout of €23.5 billion ($30.33 billion).

It is unclear how much money was handed out in bonuses, but Bankia issued them after it claimed it had made a profit of €300 million ($387.24 million) in 2011. In fact, it actually lost €3.30 billion ($4.26 billion) last year.

On Friday, Bankia reported it had lost an additional €7.05 billion ($9.10 billion) in the first three quarters of this year.

Join the Discussion