A RELIEVED Spanish government welcomed a fall in unemployment for the third month running as “good news” yesterday.
The decline was largely thanks to a public works programme designed to create jobs and seasonal hiring in the tourism sector.
Jobless claims fell by 20,794 in July to 3.54 million. But with nearly 18 per cent of the workforce unemployed, Spain still has the highest rate in the European Union. Compared with July last year, unemployment was up by more than one million.
Spain’s governing Socialists, who are suffering in opinion polls because of the economic crisis, took comfort from the statistics.
“Although we are still at a difficult moment and we must be cautious, these data show the government’s measures are starting to bear fruit,” Leire Pajín, organisational secretary of the Socialist party, said in a radio interview.
Maravillas Rojo, secretary-general for employment, said it was too early to talk of a permanent change of direction and admitted the jobless figures could rise again. “But if it does rise, we don’t expect to do so at the same rate as it did last year.”
As in the rest of Europe, there are early signs of economic recovery in Spain. Consumer confidence rose to a 17-month high last month.
But much of the recovery in employment is the result of a hurriedly implemented public works programme – installing new street lights, for example – that has contributed to a rising budget deficit and is unlikely to be sustained for more than a few months.
In a research note, Citigroup said that seasonal factors and the employment of construction workers for government schemes explained the better numbers, but it believed “the general trend in the labour market is stabilising”.
Even so, most economists predict that Spain’s economy will face a difficult autumn and that unemployment will rise above 20 per cent of the workforce before it starts to decline again.– (Copyright The Financial Times Limited 2009)