Spain’s jobless rate highest in the Eurozone

Spain's unemployment rate is more than double that of the U.S. (Leslie Patton/MEDILL)

BY LESLIE PATTON – MEDILL NEWS SERVICE

Spain’s unemployment rate has soared to 17.4 percent, the highest of the European countries.  The only countries that come close to Spain’s jobless rate are Latvia, 16.1 percent, and Lithuania, 15.5 percent.

The unemployment rate in the Eurozone, which encompasses the 16 countries that use the Euro as their national currency, was 8.9 percent in March 2009, up from 8.7 percent the month prior.  Unemployment in the U.S. was 8.5 percent.

“All the economic analyses show Spain as the European country which has been hardest hit by the crisis and will take the longest time to recover,” according to ESADE, a college associated with Ramon Llull University in Barcelona, Spain.

The current year is expected to be the worst for unemployment in Spain, according to Octavio Granado, Spanish secretary of state for social security.  “So we are in the epicentre of the crisis. We are in the eye of the perfect storm,” Granado told state television.
Part of the reason for Spain’s exorbitantly high unemployment may be that nearly one-third of the workforce are considered temporary employees and are therefore easily expendable, frequently let go at the first sign of trouble.

Many economists expect Spain’s recovery to be a slow one, emphasizing the need for labor reforms to make the hiring and firing of permanent employees less costly.

Another contributing factor to Spain’s jobless rate may be the Spanish housing boom and bust that is comparable to the real estate malaise in the U.S.  The collapse of the housing market has left 800,000 construction workers without a job.

Government is attempting to combat unemployment with its €70 billion fiscal stimulus program, which is supposed to create jobs through public infrastructure investment, much like the plan in the U.S.  Spain’s socialist government is also cracking down on immigration to stem growth of the workforce.

Dominic Bryant, an economist with BNP Paribas, a European bank and financial services company with a presence in 85 countries, predicts Spain’s unemployment will grow to about 23 percent.

Tags: BNP Paribas, Dominic Bryant, ESADE, European Union unemployment, Eurozone, Octavio Granado, spain, Spain jobless rate, Spain unemployment