MercoPress. South Atlantic News Agency

Record unemployment in Spain: 17.36%, heading for 19.4%

Spain's jobless rate rose sharply, to 17.36% in the first quarter of 2009 with more than 4 million people out of work, the government said Friday. Nearly half of the 4 million lost their jobs in the past year, the National Statistics Institute pointed out

The numbers did not surprise economists, who have been tracking steady increases of monthly jobless raw numbers from the government. But Spain's official jobless rate is revised only every quarter.

Spain's previous rate of 13.9% issued early this year for the fourth quarter of 2008 was already the highest in the European Union. When Spain's jobless figure earlier topped 3 million, officials predicted it would not make 4 million.

The Bank of Spain recently predicted the jobless rate would reach 19.4% in 2010, as the recession took hold.

“It is a terrible figure,” Octavio Granado, Secretary of state for social security told state television. He added the first quarter of any year was traditionally bad for employment in Spain.

Mr Granado also said that 2009 was expected to be the worst part of the economic downturn.

“So we are in the epicentre of the crisis. We are in the eye of the perfect storm,” he said.

Prime Minister Jose Luis Rodriguez Zapatero recently shuffled his Cabinet, replacing the finance minister and others in a move to boost the economy. Rodriguez Zapatero predicts that public works subsidies distributed across the country will soon produce tens of thousands of jobs.

But critics say deeper reforms of the labour market are needed - to eliminate red tape, and reduce the costs of hiring and firing permanent staff, he adds. Under the current rules, many employers prefer to offer temporary contracts to staff who are then let go at the first sign of trouble.

Spain's once-booming construction industry has been battered by the global economic crisis. But the latest government report shows more jobs were lost in the last quarter in the services sector, another pillar of the economy.

The number of temporary workers declined in Spain, the government said. But economists say that's because companies lay off those workers first. It costs a business in Spain about three times more to lay off a full-time employee.

Increased unemployment was seen across all sectors and across the country, with the urban areas around Madrid, Barcelona and Valencia hit hard, the government said