Spanish jobless at record 4m

Spanish jobless at record 4m
By Victor Mallet in Madrid
Copyright The Financial Times Limited 2009
Published: April 24 2009 09:41 | Last updated: April 24 2009 18:31
http://www.ft.com/cms/s/0/54cf94a6-30a9-11de-bc38-00144feabdc0.html


Spain’s army of unemployed swelled to a record 4m in the first quarter of this year as hundreds of thousands of workers in services and construction fell victim to economic recession and the collapse of the country’s housing market.

Jobless numbers jumped by more than 800,000 in the quarter to reach 4.01m or 17.4 per cent of the workforce, double the European Union average, according to the National Statistics Institute. Spaniards have been losing jobs at the rate of almost 9,000 a day since January.

The figures come as a blow to José Luis Rodríguez Zapatero, the Socialist prime minister. He has put a brave face on Spain’s deep recession and has repeatedly expressed confidence in the government’s €70bn ($93bn, £63bn) of emergency deficit spending.

“The data are bad, and worse than expected,” Elena Salgado, the new finance minister, said on Friday. She admitted that Spain had lost more jobs in the first three months of 2009 than in any quarter since records began in 1976, the year after the death of Francisco Franco.

“We must continue doing everything possible to brake this destruction of employment,” she said, expressing hope that the rise of unemployment would start to decelerate this month.

Spain’s economy grew rapidly until 2008 on the back of the surge in home building, drawing in millions of immigrant workers from Latin America, north Africa and eastern Europe. Although the number of unemployed is now at a record high, the unemployment rate as a proportion of the active population has yet to reach the 18 per cent hit in 1998 because today’s workforce is larger.

Typical of the new unemployed is Gustavo Pérez, who once worked as a financial markets trader for a cash-rich Spanish construction company but lost his job when the housing market collapsed and the company closed its trading arm.

On Friday, the 33-year-old dealer was waiting in line with a recently fired Spanish public relations officer and a redundant Moroccan building worker at a government employment office in central Madrid. “If I don’t find anything before the summer, I’ll have to wait until September,” he said.

That may be overly optimistic. Economists expect the Spanish jobless rate to exceed 20 per cent in the months ahead and say Spanish unemployment could peak at more than 5m.

Dominic Bryant, senior European economist for BNP Paribas, said the poor numbers boded ill for the rest of Europe and showed how much competitiveness Spanish labour had lost.

“Spain and Ireland together have accounted for 75 per cent of the eurozone’s unemployment increase in the 12 months to February, even though they make up only 14 per cent of gross domestic product,” he said. “That tells you a lot about how bad their performance has been.”

Spanish employers are pleading for a reform of Spanish labour laws, saying it is too expensive to hire and fire permanent workers.

One curiosity of the latest statistics is that the number of permanent employees in Spain, including civil servants, actually rose slightly in the quarter, while the number of temporary workers fell sharply.

In the past year, the collapse of the housing market has wiped out almost 700,000 building jobs. But the services sector, which includes the struggling tourism industry, has suffered the most job losses so far this year.

The highest unemployment is in the rural south-west, while the industrialised Basque country and surrounding regions in the north are the least affected. Spanish unemployment has almost doubled over the past year, and the jobless rate is already above 20 per cent in the Canary Islands, Andalucía and Extremadura.