Labor union leader foresees jobless rate of over 21 percent

The head of leading Spanish labor union CCOO has predicted Spain's jobless rate will climb above 21 percent in the first quarter of this year with the number of people out of work approaching the critical five-million mark.

In remarks to local radio station Punto Radio on Monday, Ignacio Fernández Toxo said the unemployment figures showed that labor reforms introduced last year had evidently failed to serve the purpose for which they were notionally designed. "When the economy continues in a situation of lethargy, as is the case in Spain, it is normal that [...] jobs continue to be destroyed."

Changes to the labor market made it cheaper to sack workers, and were aimed at breaking the dual nature of employment in Spain where those on permanent contracts had generous severance allowances of up to 45 days' pay for every year in service, while those on temporary contracts, which account for about a quarter of all jobs, are offered little coverage. This leads to surges in unemployment during crises as companies rapidly shed temporary workers.

The National Statistics Institute (INE) is due to release its Survey of the Active Population (EPA) for the first quarter on April 29. The jobless rate at the end of last year stood at 20.33 percent, with 4.696 million out of work. The unemployment rate in Spain is the highest in the European Union, and over double the average rate in the 27-member bloc.

The Spanish government earlier this month raised its estimate for unemployment for this year to 19.8 percent from an earlier forecast of 19.3 percent. The government believes the economy will be growing at a pace that will start to create jobs in the second half of this year, and estimates that the jobless rate will drop to 18.5 percent in 2012 and 17.3 percent the following year.

But Toxo on Monday said a "long road" lay ahead before the labor market improved.