Spain jobless rate swells to over 20%

MADRID (AP) — Spain’s jobless rate has risen over 20 percent for the first time since 1997, the government said over the weekend — more dismal news for a recession-plagued economy that is being dragged into Europe’s debt crisis.

The National Statistics Institute said the rate rose 1.22 percentage points in the first quarter to 20.05 percent.

While other major economies in Europe and elsewhere have posted at least tepid growth as they crawl out of recession, the eurozone’s fourth-largest economy is still contracting after the collapse of a construction boom that had fueled years of expansion.

The agency said at the end of March, there were over 4.6 million people out of work in the country. The jobless rate is the highest since the last quarter of 1997, when it stood at 20.11 percent.

Since Spain slipped into recession in 2008, the rate has roughly doubled, a dramatic development for a country that had been one of Europe’s top job-creators.

Now, with the recession forcing the government to spend heavily on joblessness benefits and stimulus measures, the deficit is soaring, triggering worries among investors that Spain might be in danger of a debt crisis like the one that has engulfed Greece. Ratings agency Standard & Poor’s downgraded Spanish debt last week.

Finance Minister Elena Salgado called the unemployment figure “very high.” She noted, however, that fewer jobs are being lost than last year - about 290,000 in the quarter that just ended, compared to a stunning 800,000 in the first quarter of 2009.

“A much lower number of jobs has been lost, but that does not mask the gravity of these figures or the government’s determination to do what is necessary to create jobs,” she told reporters.

Salgado later announced the government had decided to scrap 32 ministerial departments and merge or eliminate 38 state-owned companies to save money as part of deficit-cutting austerity measures. With this, the government will save 16 million euros ($21 million).

Spain, once among Europe’s largest creators of jobs and boasting more than a decade of solid GDP growth, is now suffering its worst recession in decades. It has been in recession since the third quarter of 2008 after the collapse of a boom fueled by residential construction and credit-fueled consumer spending. The building sector and related industries had accounted for nearly 20 percent of the country’s economic output.

Immigrant workers provided a lot of that manpower. The jobless rate among foreigners living in Spain is now almost 31 percent.

Last year the economy contracted 3.6 percent. The government’s official forecast is that the economy will post at least modest growth in the first quarter compared to the last three months of 2009, and contract 0.3 percent on the year, then grow 1.8 percent in 2011.