Spanish Unemployment Stays Above 25% as Rajoy Seeks GrowthAngeline Benoit
Spain’s unemployment remained above 25 percent for a sixth straight quarter, underpinning the extent of the damage wrought by a six-year slump in the euro region’s fourth-largest economy.
The jobless rate was at 26.03 percent of the workforce in the three months through December compared with 25.98 percent in the previous quarter, the National Statistics Institute in Madrid said today. Economists expected the rate to remain unchanged, according to the median of seven forecast in a Bloomberg News survey.
Over the same period, the economy grew 0.3 percent from the third quarter, while it contracted 1.2 percent in 2013 from the previous year, the Bank of Spain said today, confirming the government’s estimate. That’s its first two straight quarters of expansion in over two years.
Spain, which accounts for about 10 percent of the euro region’s population, is home to close to a third of its jobless people. Prime Minister Mariano Rajoy forecasts economic growth of at least 0.7 percent will generate net jobs this year after a slump triggered by the end of a real-estate boom in 2007 more than tripled the nation’s unemployment rate.
“It’ll be a slow process for domestic demand to recover,” said Miguel Cardoso Lecourtois, chief economist for Spain at Banco Bilbao Vizcaya Argentaria SA in Madrid. “The government’s reforms have improved confidence, but it can only have an impact on the real economy in the medium term.”
In the last quarter, Spain’s workforce shrank to its lowest level since 2008 as people gave up job hunting or left the country to find work elsewhere. The share of households with all active members unemployed was at 10.5 percent.
The country will see net job creation in the first half, Deputy Economy Minister Fernando Jimenez Latorre told reporters in Madrid today. In seasonally adjusted terms, employment already expanded in the last quarter from the previous one, by 0.29 percent, it’s first increase since 2008, INE data show.
“Data show a transition towards a gradual improvement,” said Xavier Vives Torrents, a economy professor at IESE business school in Madrid. “Job destruction has slowed though there are also discouraged workers who aren’t looking for employment anymore.”
Unemployment would be even higher now had Rajoy not overhauled labor rules in 2012, according to a report in December by the Paris-based Organization for Economic Cooperation and Development. The measures have aided hiring by making it easier and cheaper for companies to fire workers or lower wages.
General Motors Co. said this month it plans to invest 210 million euros ($284.8 million) at its plant in Figueruelas, in northern Spain, and PSA Peugeot Citroen has said it’ll manufacture a compact minivan in the country while closing a French facility. Many companies are still reducing headcount, such as Tecnocom Espana Solutions SL, which announced 175 job cuts this month.
While the government has rejected calls from the International Monetary Fund and the Organization for Economic Cooperation and Development to increase labor-market flexibility, Labor Minister Fatima Banez this week said the government will take more measures to train unemployed people.