Unemployment will drop to pre-crisis levels in 2019: Spanish bank

Spain will return to its pre-crisis level of unemployment at the end of 2019 if growth continues at the current pace, Spanish bank BBVA has predicted.

Unemployment will drop to pre-crisis levels in 2019: Spanish bank
80 percent of inequality cases in Spain are related to unemployment. Photo: AFP

Before 2008’s financial crisis began, Spain's unemployment rate stood at around 8 percent while the latest 2018 studies put the figure at 15.8 percent.

This is still a far cry from the record levels reached in 2013, when unemployment skyrocketed to almost 27 percent.

According to the macroeconomic analysis branch of Spanish megabank BBVA, Spain’s job growth is “notable” given that 86 percent of the jobs lost during the crisis years have been recovered.

Rafael Doménech, head of the group dubbed BBVA research, told Catalan daily La Vanguardia that at the current growth rate Spain would return to its 2007 pre-crisis level of employment by 2019.

The research group also found that 80 percent of inequality cases in Spain are related to unemployment, adding that job creation is “essential” to guarantee a more inclusive Spanish society with higher living standards.

Doménech also explained how an increase in productivity would lead to a drop in temporary job contracts as full-time positions have been proven to be 15 percent more productive.

Even BBVA Research’s most cautious forecast, which takes into account protectionism and political instability, puts growth for 2018 at 3 percent and 2.5 percent for 2019. 

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The banking group added that Spain needs to reinforce its fiscal space to face potential recessions in future and improve the sustainability of the welfare state in the face of the country’s aging population.

Spain has seen considerable improvements to its crippling unemployment rate since peaking at 26.3 percent in 2013.

In 2016 the jobless rate had dropped to 19.6 percent and in August 2017 it stood at 17.1 percent. 

But some, including Spanish trade unions reported that the labour market was still suffering the effects of the crisis and austerity measures implemented by Prime Minister Mariano Rajoy's government.

“Jobs are increasingly temporary and in December just four out of every 100 contracts signed were long-term and full-time,” UGT said in a statement in January. 

According to Spain’s labour ministry, some 19.6 million temporary contracts were signed last year, up 7.1 percent from 2016, while just 1.9 million long-term contracts were handed out, a 12.6 percent rise.


Unemployment in Spain hits four million for first time since 2016

The number of people in Spain registered as unemployed surpassed four million for the first time in five years in February, government figures showed Tuesday, as pandemic restrictions hit the country's tourism-dependent economy.

Unemployment in Spain hits four million for first time since 2016
Photo: Josep Lago/AFP

Jobless claims rose by nearly 45,000 last month over last month to hit 4,008,789, the labour ministry said, the fifth consecutive monthly increase.

The rise is due to the impact of “severe restrictions imposed to combat the third wave of the pandemic,” the ministry said in a statement.

The last time the number of jobless in Spain rose above four million was in April 2016.

Spain’s regional governments, which are responsible for health, have imposed various measures to try to curb the spread of the coronavirus, including shutting down bars and restaurants and nightly curfews which have hit the hospitality sector hard.

A broader, quarterly household survey by the national statistics institute INE provides the official unemployment rate, which hit 3.7 million or 16.1 percent at the end of December.

Both the labour ministry and the INE figures do not include the roughly 755,000 people benefitting from a government coronavirus furlough scheme as of the end of last year.

The Spanish government says it has spent €40 billion ($48 billion) since the start of the pandemic to finance the furlough scheme and help the self-employed.

Spain’s economy contracted by 11 percent in 2020, one of the worst performers in the eurozone, with its key tourism sector battered by the