MercoPress. South Atlantic News Agency

Unemployment in Spain climbs to 4.4 million at end of 2011

Future of the welfare state in question, says Economy Minister Luis de Guindos

Spain ended 2011 with record high unemployment, according to data released Tuesday as the new conservative government of Prime Minister Mariano Rajoy considers additional austerity measures to reduce the budget deficit.

The “bad and negative” unemployment figures place the future of the welfare state in question, Economy Minister Luis de Guindos said. More than 4.42 million Spaniards were out of work at the end of 2011, an increase of 7.86% over December 2010 and the highest total since 1996.

The statistics confirm “the deterioration of the economic situation in the second half of the year,” the secretary of state for Employment, Engracia Hidalgo, said.

Spain’s unemployment rate, nearly 23%, is the highest in the developed world and more than 45% of Spanish youth are without jobs.

The 2011 unemployment report comes less than two weeks since Rajoy took office pledging to make job creation a priority. With this target in mind PM Rajoy called on Spanish unions and employers’ associations to agree by the end of this week on a new overhaul of labour law.

The government would prefer to achieve the reform through an accord with business and labour, but if that proves impossible, the administration has a responsibility “to act,” Hidalgo said Tuesday.

Spain’s two largest labor federations, the UGT and the CCOO, say what is needed to create jobs are policies to spur economic growth, not additional changes to employment law.

Rajoy’s government introduced last week a tough austerity package of 8.9 billion Euros in spending cuts and an across-the-board increase in personal income tax.

The plan also includes a continued freeze on civil servants pay – already cut by an average of 5% in 2010 – and a freeze on Spain’s minimum wage, which, at 641 Euros a month, is among the lowest in the European Union.

The government will adopt additional austerity measures at this week’s Cabinet meeting, De Guindos said Tuesday, though he ruled out a hike in value added taxes.