Unemployment in Spain has reached over the 5 million mark for the first time since records began, that has provoked more questions over the conservative government’s austerity plans.
Figures from the State Public Employment Service revealed that 5,040,222 were out of work in February, a rise of 59,444 from the previous month.
Although on a more positive note, the rise was below the average of a 94,000 rise in unemployment during February, since the economic crises began in 2008.
Additionally, in seasonally adjusted figures, unemployment has actually fallen by a slender figure of 1802, but massaging of the latest data cannot hide the massive employment problem that Spain faces. In January Eurostat calculated Spain’s unemployment rate at 26.2%, this was 15.4% higher than the EU average, only Greece currently has a worse problem out of the 27 member state nations. Agriculture suffered more than any other sector the State Public Employment Service figures highlighted, with a 3.9% increase in the jobless, this was followed by services where those without work had increased by 1.28%, industry and construction were also hit badly with 0.29% and 0.18% increases respectively.
The number of recorded employment contracts had also decreased by 40,144, shrinking by 4.05% compared with February last year.
The lack of economic growth continues to hamstring the creation of new jobs, last week the Spanish government announced that the recession had now stretched over five successive quarters, with a contraction of 0.8% in the final quarter of last year.
National demand fell with the reduced growth, and in turn took 4.7 points off the inter-annual variation in GDP, seven tenths more than in the third quarter.
This is reflected in a downward turn in household expenditure of 3%, a reduction in spending by 0.9% from the same period a year ago.
Prime Minister Mariano Rajoy continues to point to the tough choices that he has had to make to get the deficit down, and told the lower house on 27 February, that the public deficit had reduced by 3.5% to 6.7% during 2012, reductions that are in agreement with the European Commission.
He also boasted that no other OECD country had been able to achieve that level of structural spending cuts over the course of a year.
At the end of last year the Spanish government formally requested the disbursement of €39.5 billion of funds as part of the Commission’s financial assistance programme, which was paid in December in accordance with agreed financial sector conditions.
Last month the government faced mass protests in Madrid over the austerity and Spending cuts programme, with new labour laws making it easier to fire workers also attracting criticism, the demonstrators argued that cut backs had not resulted into growth.
Roman Gil Alburquerque, a partner at Spanish law firm Sagardoy Abogados, who deal in labour issues, said: “There has been changes in regulation that will make it easier to hire workers in the future, unemployment is of course related to economic growth and its increasingly its a matter of confidence and getting money into the economy rather than regulation only”
“We have modified labour protection to be in line with other European countries, so that companies can be adaptable to the situations that they face. For example there have been changes to salaries, and the cost of dismissal has been reduced, with severance costs after February last year brought down to a maximum of 33 days pay for up to two years. Authorities for collective redundancies has also been scrapped, and that is a very positive move for flexibility, this kind of operation was in place with the dictatorship.”
“The protestors have to realise that this is the right thing to do in a long term project, and Spain is striving for a balanced agreements system which is the equivalent of other countries. What I would like to see now is a directive for part time workers to agree the amount of hours to be worked, that is useful for say students, and I would like to see less partisan judges when dealing with labour market cases.”
In response to growing unemployment the Spanish government has released a raft of reforms that include a reduced VAT regime for the self employed, and SME’s with a turnover of less than two million. There will also be the mobilisation of EUR45 billion in mediation loans for SME’s, to be administered by the state owned ICO bank.
To tackle youth unemployment, there will be a new flat rate of social security contributions for newly self employed persons under the age of 30, where they can still claim unemployment benefit for nine months, there are also incentives for companies to employ young people until the unemployment rate drops below 15%.