Has the crisis bottomed out?

Before the National Statistics Institute announced last week that 4.9 million people were now officially registered as unemployed, the government was talking about joblessness having reached turning point. Responding to the latest figures on Friday - the worst in 14 years - Deputy Prime Minister Alfredo Pérez Rubalcaba said that unemployment would now "fall, and keep falling." He then qualified his prognosis by saying that it was simply a "risky opinion."

And while many experts believe that unemployment may well have peaked, there is little unanimity of opinion as to how much the job market will recover in the short to medium term.

Spain has been hard hit by the global financial crisis, with some 2.4 million jobs having been lost in the last three years. Unemployment has been above 20 percent for the last year, the highest rate in the developed world. During this time, Spain's competitors have managed to put their economies right, and begin to register signs of recovery, while at the same time, stabilizing their job markets.

"I wouldn't like to say whether we will pass the five-million-unemployed mark, but simply that the market has adjusted all that it is going to," says Lorenzo Serrano of Valencia's Institute for Economic Research. Sara de la Rica, a professor of Economics at the University of the Basque Country, predicts that unemployment will fall between now and the end of the third quarter due to tourism, but doubts that the job market will return even to the levels of six months ago.

At the same time as unemployment has risen sharply over the last three years, Spain's labor force has shrunk, says Sara Baliña of consultants Analistas Financieros Internacionales. "The size of the workforce has been reduced, and that makes it less likely that the number of people without work will increase," she says.

In the first quarter of this year, more than 42,000 people signed off the National Employment Institute's (INEM) books. Growing numbers of people who have lost their jobs no longer bother signing on with the service. "What really underscores the decline in the numbers of people in the labor market is the belief that there are simply no jobs out there," says de la Rica, who points out that if there were the least chance of a job, many more unemployed people would be registered with the INEM. What that also means is that the real joblessness figure has already passed the five-million mark.

Even as recently as a year ago, although unemployment was rising, there was an increase in the size of the labor market, which held out hope for the future. But now, say the experts, the trend will be for a gradual decline in unemployment, but minimal job creation. As Labor Minister Valeriano Gómez pointed out after Friday's Cabinet meeting, "From now on, the important thing is not whether we pass the five-million jobless mark, but how many jobs are created. If the labor market grows, there may be more unemployed, but that would be better than [what we have] at the moment."

Faced with little chance of finding employment, more than one million people aged under 30 have left the INEM's books, many of them returning to study. But 70 percent of those who left during the first quarter of this year were immigrants, many of whom have had no option but to return to their countries of origin or to take up work in the informal economy, says de la Rica. "There is a strong sense of hopelessness among many people; there are a great number of people who are not working, but who simply do not show up in the official figures," says Baliña. "Unemployment and inflation [which hit 3.8 percent in April], undermine confidence, and so people spend less," says an analyst at AFI, who highlights the 8.6-percent drop in retail sales in March over the same period in 2010. Price rises are also being driven by the European Central Bank's decision to raise interest rates, making it even harder for Spanish companies to raise money.