Madrid – Some 100,000 net new jobs will be created in Spain in the second half of 2011 "in a best-case scenario," and the unemployment rate will remain above 20 percent at least until 2013, according to a forecast from the No. 2 Spanish bank.
In presenting the report, Grupo BBVA chief economist Jorge Sicilia said those figures will depend on the performance of Spain's economy, which the bank expects will grow 0.9 percent in 2011 - compared with a government forecast of 1.3 percent growth - and 2 percent next year.
Because the relationship between gross domestic product growth and the unemployment rate is "highly linear," BBVA says the jobless rate will rise from 20.1 percent in 2010 to 20.6 percent this year before falling back to 20.1 percent in 2012.
A sustained recovery will begin to take hold in the second half of 2011 but Spain will not see a net increase in employment for the year until 2012, the bank said.
Referring to a 2010 labor-law overhaul, BBVA said it represented a "significant advance" but will have a "limited" impact on labor market segmentation and job creation.
The bank recommended linking wage hikes to each individual company's productivity and situation rather than to rises in the consumer price index, as has been common practice in Spain.
That "key" point should be included as part of a reform of Spain's collective wage-bargaining process, Grupo BBVA said.
The effects of the global recession were aggravated in Spain by the collapse of a long construction and property boom that made the country's economy the envy of most of Madrid's partners in the European Union.
Responding to the crisis, Prime Minister Jose Luis Rodriguez Zapatero's government pushed through the labor-law overhaul and took other steps aimed at boosting investment and job creation and curbing spending as it sought to calm fears that Spain may require an Irish- or Greek-style bailout.
Organized labor protested the overhaul, saying it will diminish workers' rights without spurring job creation.
But Spanish employers' associations and international agencies such as the IMF had insisted on its necessity, saying Spain's labor laws are too rigid and discourage companies from taking on new personnel.
Source: Fox News