Spanish Business News

Spain's unemployment rate remained practically unchanged at an EU-high of 17.9 percent in the third quarter after rising for eight consecutive quarters. Officials warned the rate will probably rise again.

The number of jobless now stands at 4,123,300, the National Statistics Institute said.

That figure is down slightly from the second quarter, by 14,100, but this had a negligible impact on the unemployment rate because the workforce also decreased.

Spain's once-buoyant economy is mired in recession after the collapse of a construction and consumer-spending boom that had fueled nearly a decade of growth. In less than two years, the jobless rate has more than doubled.

The third quarter coincided with the summer holiday season, when companies hire more staff, and the final months of a multi-billion euro public works spending program enacted by the Spanish government as part of its efforts to stimulate the economy.

Deputy Prime Minister Maria Teresa Fernandez de la Vega said Spain is in for more pain before its economy starts growing in earnest again.

"There will be more quarters when unemployment is expected to rise," she said after a Cabinet meeting at which the government approved another euro5 billion ($7.5 billion) in funding for local governments to create jobs.

Finance Minister Elena Salgado had said Thursday that the third quarter figure would be encouraging but the fourth quarter figure less so. The government's official forecast, released in June, is that the jobless rate will hit 18.9 percent next year.

The data released Friday give compelling evidence of how Spain has gone from being one of Europe's main creators of jobs to the country that is hemorrhaging them most. The unemployment rate is the highest since 1998, and over the past 12 months 1.52 million people have lost their jobs. There are 1.13 million households with no working members.

The government is spending so much on joblessness benefits and economic stimulus measures that it has been forced to propose higher VAT and capital income taxes in the 2010 budget now making its way through Parliament.

Source: Business Week