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ECONOMY

Spain sees increase in first quarter jobless

Spain's high unemployment rose slightly in the first quarter, official data showed on Thursday, a reminder in an election year of the challenges the country faces as it seeks to cement a fragile economic recovery.

Spain sees increase in first quarter jobless
Spanish job centre queue. Photo: AFP

The jobless rate rose to 23.78 percent, according to the National Statistics Institute (INE), up from 23.7 percent in the previous quarter.

The increase is a blow for Spain's conservative government as it prepares for municipal and regional elections next month and general elections by the end of the year.

Prime Minister Mariano Rajoy has repeatedly said creating jobs is his top priority after pushing through labour market reforms, reducing a budget gap and rescuing the country's teetering banks.

The number of people out of work in the January to March period actually fell by 13,100 to 5.44 million when compared with the previous quarter, the biggest drop in unemployment in a first quarter since 2005, it said in a statement.

But the unemployment rate still rose because the size of the workforce shrank during the first quarter by 127,400 people to 22.9 million as the length of Spain's economic downturn prompted many long-term unemployed to give up looking for work or leave the country.

"The numbers have never been so clear: the long-term unemployed are stopping looking for work," said Maria Angels Valls, a professor of management at Spain's ESADE business school.



Winter doldrums

The government highlighted the fact that winter is traditionally a bad period for jobs in tourism-dependent Spain.

"The first quarter is the most complicated for the Spanish economy, from a seasonal point of view," Economy Minister Luis de Guindos said during an interview with Spanish radio broadcaster Onda Cero.

The Spanish economy, the eurozone's fourth-largest, fell into recession in 2008 when a property bubble burst putting thousands of labourers out of work, and the resulting aftershock claimed millions more jobs across the country.

It grew by 1.4 percent in 2014 – the first full-year economic growth since the property collapse – due to a rise in private consumption, higher business investment and a recovery in the construction sector.

But unemployment is expected to remain high with the International Labour Organization predicting Spain's jobless rate remaining above 20 percent until the end of the decade.

"The risk that unemployment could remain uncomfortably high for several years is acute," said Raj Badiani, an economist at IHS Global Insight.

"The latest labour market data suggest that employment is now on an upward trajectory with firms increasingly able to ramp up their employment intentions, but the pace of recovery will still have to overcome some lingering obstacles."

The government predicts Spain will end the year with a jobless rate of 22.2 percent, one of the highest levels in the industrialised world.

The leader of the main opposition Socialists, Pedro Sanchez, blamed the rise in the unemployment rate on a 2013 labour market reform that made it easier for companies to fire workers and reduced severance pay.

He said the reform, which he has vowed to repeal if elected prime minister, "opened the doors for the mass dismissal of many workers."

Spain's unemployment rate stood at 8.57 percent in 2007 at the height of the property boom, its lowest annual level since the country returned to democracy following the death of dictator Francisco Franco in 1975.

ECONOMY

Spain’s middle-class youngsters the most likely to end up poor across all EU

Spain leads the ranking of EU countries with the highest risk of young people ending up in poverty as adults, despite coming from families without economic difficulties.

Spain is the fourth EU country with the highest inherited poverty
Spain is EU country with most middle-class young people who end up poor. Photo: Jaime ALEKOS / AFP

Spain is also the fourth EU country with the highest rate of inherited poverty risk, according to Eurostat, the EU Statistical Office.

Data on intergenerational poverty indicates that there is a correlation between the financial situation of the household you grew up in and the risk of being poor when you reach adulthood and in Spain, there is a strong link. 

The latest statistics available from 2019 show that the at-risk-of-poverty rate for the EU was 23 percent among adults aged 25 to 59 who grew up in a poor financial situation at home when they were 14 years old. This is 9.6 percentage points more than those who come from families without financial problems (13.4 percent). 

READ ALSO: Spain’s inflation soars to 29-year high

How the situation in Spain compares with the EU

Spain has become the EU country with the highest risk of poverty among adults who grew up in families with a good financial situation  – 16.6 percent.

This was followed by Latvia with 16 percent and Italy with 15.9 percent.

That statistics also show the countries where it is less likely to be poor after growing up in households without economic difficulties. These include the Czech Republic (5.9 percent), Slovakia (7.9 percent) and Finland (8.5 percent).

The overall poverty rate in the EU decreased by 0.1 percentage points between 2011 (13.5 percent) and 2019 (13.4 percent), but the largest increases were seen in Denmark (1.9 points more), Portugal (1.8 points), the Netherlands (1.7 points) and Spain (1.2 points).  

On the other hand, the biggest decreases in the poverty rate were seen in Croatia (-4 percent), Lithuania (-3.6 percent), Slovakia (-3.5 percent) and Ireland (-3.2 percent).

READ ALSO: Spain’s government feels heat as economic recovery lags

Inherited poverty

The stats revealed that Spain was also the fourth country with the highest rate of inherited poverty risk (30 percent), only behind Bulgaria (40.1 percent), Romania (32.7 percent) and Italy (30.7 percent).

This means that children of poor parents in Spain are also likely to be poor in adulthood. 

The countries with the lowest rate of inherited poverty risk were the Czech Republic (10.2 percent), Denmark (10.3 percent) and Finland (10.5 percent).

The average risk-of-poverty rate for the EU increased by 2.5 percentage points between 2011 (20.5 percent) and 2019 (23 percent), with the largest increases seen in Bulgaria (6 points more), Slovakia and Romania (4.3 points), Italy (4.2 points) and Spain (4.1 points).

The biggest drops were seen in Latvia (-8.5 points), Estonia (-8.0 points) and Croatia (-2.3 points). 

The largest gaps in people at risk of poverty when they reach adulthood were in Bulgaria (27.6 percentage points more among those who belong to families with a poor economic situation as teenagers compared to those who grew up in wealthy households), Romania (17.1), Italy (14.8), Greece (13.5) and Spain (13.4).

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