Spain’s unemployment reaches milestone.
Unemployment in Spain has reached 20 percent, meaning 4.6 million people are out of work, the Spanish government announced Friday.
The figure, from the first quarter, is up from 19 percent and 4.3 million people in the previous quarter. It represents the second-highest unemployment rate in the European Union, after Latvia, according to figures Friday from Eurostat, the EU’s statistics service.
Spanish Prime Minister Jose Luis Rodriguez Zapatero told Parliament on Wednesday he believes the jobless rate has peaked and will now start to decline.
The first quarter of the year is traditionally poor for Spain because of a drop in labor-intensive activity like construction, agriculture and tourism.
This week, Standard & Poor’s downgraded Spain’s long-term credit rating and said the outlook is negative.
“We now believe that the Spanish economy’s shift away from credit-fuelled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed,” Standard & Poor’s credit analyst Marko Mrsnik said.
Gross domestic product growth in Spain is expected to average 0.7 percent annually through 2016, compared with previous expectations of 1 percent annually, he said.
Spain’s economic problems are closely tied to the housing bust there, according to The Economist magazine. Many of the newly unemployed worked in construction, it said.
The recession revealed how dependent public finances were on housing-related tax revenues, it said.
Another problem in Spain is that wages are set centrally and most jobs are protected, making it hard to shift skilled workers from one industry to another, the magazine said.
Average unemployment for the 27-member European Union stayed stable in March at 9.6 percent, Eurostat said Friday. That percentage represents 23 million people, it said.
The lowest national unemployment rates were in the Netherlands and Austria, which had 4.1 and 4.9 percent respectively, Eurostat said.