January 28, 2011

Spain Unemployment Back Above 20%! The Highest Unemployment Rate In The Developed World!

The Wall Street Journal
written by David Roman
Friday January 28, 2011, 4:23am ET

MADRID—Spain's unemployment rate soared back above 20% in the last three months of 2010 as more than 138,000 jobs were lost, casting doubts about the strength of the ongoing recovery in the euro zone's fourth-largest economy, data released Friday by the country's statistics institute INE shows.

Fourth-quarter unemployment stood at 20.3%, up from 19.8% in the third quarter, and the highest level since the second quarter of 1997, when it was at 20.7%. The third-quarter decline had been the first since the rate started a continued rise in the second quarter of 2007, from well below 10%.

In addition, these job losses come after two consecutive quarters of net job creation, a sign that austerity policies including higher taxes across the board, as well as steep cuts in government spending, are having a negative effect in hiring policies despite minor reforms in Spain's strict labor laws.

INE said in a statement that the increase in unemployment was driven by the service and construction sectors. Overall, 4.7 million people were unemployed in the fourth quarter in Spain, which has the highest unemployment rate in the developed world.

INE data shows unemployment remains fairly variable within the country, with a growing gap between the wealthier northern and the poorer southern regions—unemployment stood at close to 11% in the Basque Country, and 29% in the Canary Islands.

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