Unemployment rises 6.9% to 5.6 million in first quarter of 2012
Number of jobless up by 365,000 between January and March Fears grow over banking sector after S&P downgrade
The number of people in Spain without work grew by 365,900 or 6.9 percent during the first quarter of the year, with 5.640 million Spaniards now out of work, according to figures released on Friday by the National Statistics Institute (INE).
Spain’s unemployment rate now stands at 24.44 percent, some 1.6 percent more than the last quarter of 2011 and the highest level in almost two decades. The figure is close to the historical peak of 1994, when the jobless rate stood at 24.55 percent. In the first three months of the year Spain entered recession and the government forecasts that the economy will contract by 1.7 percent this year.
Deputy Prime Minister Soraya Sáenz Santamaría said the jobless figures reflect that the Spanish economy is going “through one of its worst moments,” but added that the government was going “to work even harder” to create jobs.
“The figures are terrible for everyone and terrible for the government,” Foreign Minister José Manuel García-Margallo told RNE state radio. “Spain is in a crisis of huge proportions.”
During that three-month period the conservative Popular Party (PP) government implemented a harsh labor reform that made it easier and cheaper for companies to fire workers.
The news comes on the tail of Standard & Poor’s downgrade late Thursday of the government’s debt by two notches to a BB+ rating, which means “adequate payment capacity.” The ratings agency said that there was risk of an increase of bad loans at Spanish banks, and called on the European Union to foster mechanisms to spawn growth. The IMF warned earlier this week of hidden debts within Spain’s banking sector.
Spain’s lenders are carrying their biggest burden of bad loans since 1994, mostly generated by the bursting of the property bubble. The Bank of Spain has predicted that lenders will need an extra 58.3 billion euros.
But Economy Ministry official Fernando Jiménez Latorre continued to rule out any use of European funds to recapitalize the banking sector, saying that Spain has sufficient resources to issue a rescue itself should lenders need it.
According to the INE’s Active Population Poll (EPA), the rise in unemployment between January and March was three times higher among men than for women. The number of households with all of its members without jobs rose in the first quarter by 153,400, an increase of 9.7 percent, from the fourth-quarter period in 2011. There are now 1.72 million households in which all of its members are without work.
Earlier this month, Eurostat reported that Spain accounted for five out of every 10 newly unemployed workers in the single-currency euro zone.
