MercoPress. South Atlantic News Agency

Spain’s unemployment at a record 19.3% and no stopping in near future

With the end of the tourism season, the services sector unemployment soared

Spain's registered jobless rose for the third consecutive month in October reaching 19.3%, as stimulus spending began to run out and the boost from the busy summer period faded.

The unadjusted figures traditionally jump in October as hotels and restaurants wind down and job losses from the service sector accounted for almost two-thirds of all new unemployed, the government said on Tuesday.

Spanish jobless claims rose in October by 98,906 or 2.7% from September to 3.8 million people, almost a million more than a year earlier. The economy is expected to continue destroying net jobs into next year as Spain struggles to get back on its feet and state-backed building projects draw to a close.

Spanish unemployment would rise to 20% next year and increase further to 20.5% in 2011, the European Commission said on Tuesday. Spain does not report monthly unemployment figures, but Eurostat said unemployment stood at 19.3% in September compared to a 27 member average of 9.2%.

Unemployment among people under the age of 25 climbed to 41.7 percent from a revised 40.9 percent in August, the European Union’s statistics office said today in an e-mailed statement. The rate in the euro region was 20.1 percent and 10.4 percent in Germany, the report said. Overall, Spanish unemployment rose to 19.3 percent.

The government's 8 billion Euro stimulus package, aimed primarily at out-of-work builders through tens of thousands of infrastructure contracts, created around 400,000 jobs this year. But as the finishing touches are put on road-works and city centre beautification projects across the country, thousands of contractors are returning to the dole queues.

Spain's recession, not expected to end before mid-2010, in contract to its Euro-zone peers such as Germany and France, which has already started to see positive GDP growth and in October said unadjusted jobless figure fell for the fourth straight month.

“Germany is going to come out of the crisis with the same economic model it went into the crisis and we can't do that” Economy Minister Elena Salgado said during an interview on Spanish television on Tuesday.

“We can't because the construction sector, which has lost almost a million jobs, is not going to return to the same levels as before. Nor would it be reasonable for it to do so. We're suffering the effects of a bubble”.

The government is launching a new 5-billion Euro stimulus plan for 2010, though it has said the cash must be directed toward sustainable long-term growth sectors, such as renewable energy, environmental tourism and new technologies.

Spain entered the crisis with the highest rate of temporary employment in the EU, according to Eurostat, making it easier for employers to lay off staff when the recession hit. The proportion of temporary contracts among young people was about twice the rate among the overall population, according to the organization for Economic Cooperation and Development.

European Central Bank Executive Board member Jose Manuel Gonzales-Paramo and Bank of Spain Governor Miguel Angel Fernandez Ordoñez, among others, have called for changes to Spain’s labour market. Spain’s permanent workers are among the most expensive to fire in Europe, according to the World Bank.