Unemployment hits four million in Spain , 111´000 in the Balearics

PALMA AND MADRID
UNION bosses in the Balearics yesterday demanded that the local government take urgent action to stem runaway unemployment after the latest figures revealed that 41'300 people lost their jobs during the first three months of the year pushing the total number of Balearic unemployed up to a record 110'800.

The first quarter unemployment figures have dealt a severe blow to the alleged credit-crunch busting plans of both local and central government with a total four million people out of work across Spain.

The level of unemployment in the Balearics is now at an alarming 20 percent, the fourth highest in the country, after the number of people out of work at the end of March was nearly 60 percent higher than the end of the first quarter of last year.

After a sharp slowdown in the number of jobs being lost in January and February, there were high hopes that the advent of the tourist season would fuel job creation - but the latest figures clearly show that was wishful thinking and that, as the unions are demanding, the government start taking immediate and effective action.

The number of unemployed in Spain has nearly doubled over the past year as the recession destroys jobs more quickly than anywhere else in Europe.
The unemployment rate of 17.4 percent announced by the National Statistics Institute is more than double the European average, as the sources of Spanish growth since the mid-1990s are exposed as products of a credit bubble.

The figure is a major embarrassment for the Socialist government, which had said unemployment would peak at 4 million.
The government has launched a 70 billion euro fiscal stimulus programme to try to counteract the collapse of the construction sector, as well as toughened controls on immigration to slow growth of the workforce. “These figures are bad and they're worse than expected,” Economy Minister Elena Salgado told a news conference, adding that she expected the effect of government infrastructure spending to kick in by April and that joblessness will start to rise more slowly.

With the 4 million milestone already reached and the end of the recession seemingly far away, analysts said the peak in unemployment looks set to be far higher, with depression-era levels over 20 percent looming. “The momentum is clearly there for something well above 20 percent, it's odds on really. My own forecast is that it gets to something around about 23 percent,” said economist at BNP Paribas Dominic Bryant.

Unemployment leapt from 13.9 percent in the fourth quarter of last year, the biggest quarterly jump since 1976, and has already surpassed the Bank of Spain's forecast of a maximum of 17.1 percent for the year.

JOBS SLAUGHTER
The labour market slaughter is a product of the unbalanced way Spain's economy grew from the 1990s, creating jobs quicker than any other major European economy due to a now-bust construction boom that was reliant on low-productivity and cheap labour.

Another source of Spain's growth - rampant consumer spending - has also gone into reverse due to the disappearance of cheap foreign credit, taking hundreds of thousands of service sector jobs with it.

Prime Minister Jose Luis Rodriguez Zapatero has indicated he could boost public spending further despite warnings from economists that Spain is reaching its fiscal limits.

But, while infrastructure spending is helping some companies, many smaller firms are suffocating for lack of credit. “Things are terrible and the government just doesn't want to fix it,” said unemployed health worker Raquel, who did not want to provide her surname. “The government should give money to the small and medium sized companies so they can start seriously rehiring,” she told Reuters Television at a Madrid job centre.

The International Monetary Fund said on Wednesday Spain should be wary of extra fiscal stimulus measures and must curb spending to cut a ballooning budget deficit expected to rise above 8 percent of gross domestic product this year.

Instead, economists and business say the government should make it cheaper to hire and fire, something unions say they will fight and which Zapatero has promised not to do. “The workers are not going to have to pay for this crisis so long as I'm prime minister. They are not going to lose any social or political rights,” Zapatero said in an interview published in France's Le Monde yesterday.

Bryant saw Spain's economy, long healthily dependent on construction and private foreign financing, continuing to contract sharply in 2010 before stagnating in 2011.