Spain jobless rate rises to 22.9%, raising need for new labour rules

Madrid: Spain's unemployment rate rose to 22.9 per cent, the highest in 15 years, increasing pressure on Prime Minister Mariano Rajoy to change labour rules and deliver on his election pledge to create jobs in a shrinking economy.

The unemployment rate rose in the fourth quarter from 21.5 per cent in the previous three months, the National Statistics Institute in Madrid said yesterday. That's more than twice the euro- region average and exceeds the median estimate of 22.2 per cent in a Bloomberg survey of seven analysts.

Spain is home to a third of the euro region's unemployed, according to the European Union's statistics office, which estimates that half of young Spaniards are out of work. The People's Party government, which won the November 20 election after a campaign focused on jobs, has promised to overhaul labour and wage rules in the next two weeks to prompt companies to hire.

Unemployment "is the main source of vulnerability of the Spanish economy and this is something that we hope to start to fix in the short term," Economy Minister Luis de Guindos said today on Bloomberg Television in Davos, Switzerland. "We have to take a lot of decisions because there are some things that don't work properly in the labour market in Spain."

Figures

The number of households with all members out of work rose to 1.58 million, and the unemployment rate among immigrants was 34.8 per cent, INE said.

"This shows that the government has to carry out a labour reform that focuses on incentivising hiring, rather than just on cutting firing costs," Estefania Ponte, chief economist at Cortal Consors, said by telephone in Madrid. "The unemployment rate could end the year at 24 per cent."