Spanish unemployment rate rises to 20.09 per cent Spain’s job losses highest since 1997

Spanish unemployment is up for the 12th consecutive quarter while analysts predict a fall back into recession for the battling economy

Spanish unemployment rate rises to 20.09 per cent Spain's job losses highest since 1997

Spain's unemployment rate rose to a 13-year high of 20.09 per cent in the second quarter, the government said Friday, as the job market lagged behind an economy that has barely managed to break out of recession.

Though the rate increased from 20.05 per cent in the first three months of the year, the National Statistics Institute said the number of people working actually increased, due in part to companies gearing up for the summer tourism season.

Still, the overall unemployment rate rose to its highest level since 1997 because of a large increase in the work force.

Spain crawled out of recession in the first quarter of this year after nearly two years of economic contraction and has been a focus of concern in recent months, as investors fretted that its bloated deficit and troubled banking sector could necessitate a Greek-style bailout.

The statistics institute said in Friday's report that there are now 4.645 million unemployed people in Spain, more than half a million higher than a year ago.

Spain's economy grew a tepid 0.1 per cent in the first quarter but the government still expects it to contract for the year. Spain was one of the last major economies to emerge from recession.

On Thursday, a Parliamentary panel approved labour market reforms designed to stimulate the economy by encouraging employers to hire. The changes fine-tune reforms passed by decree in June as part of a long-awaited package to shake up a labour market widely criticized as rigid.

Under the latest modifications, companies in financial trouble will be able to lay off workers and pay just 20 days of severance pay per year of service — compared to as much as 45 days in other cases — by proving the firm is either losing money, expects to in the future, or is suffering a "persistent" drop in revenue.

Until now the law was more vague and left it up to a judge to decide how bad off a company is, although a judge will still have to rule on petitions for layoffs. The reforms now go to the Senate for possible amendments, but the Labor Ministry said it does not expect significant changes.

When the initial reforms were passed in June, unions hit back by calling a general strike for Sept. 29. Union leader Candido Mendez said Friday that call is now more warranted than ever.

"We have to turn out so our future is not impoverished," he said in a radio interview.



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