Unemployment rises to almost five million as election looms

The jobless rate in Spain in the third quarter of this year rose to its highest level in 15 years and the number of people out of work almost touched five million as the economic recovery appeared to come to a halt.

According to the National Statistics Institute's (INE) latest Active Population Survey (EPA) released Friday, the unemployment rate climbed by over six-tenths of a point to 21.5 percent as the ranks of the unemployed swelled by 144,700 to 4.978 million.

The figures were particularly bleak in light of the fact that hiring normally picks up in the third quarter for the peak tourist season in the summer.

"This forebodes a very negative macroeconomic scenario for the second half of the year," Bloomberg quoted José Luis Martínez, a strategist for Spain at Citibank in Madrid as saying. "The poor performance of jobs in the services sector and of part-time contracts is particularly striking given [that it happened during] the tourist season."

Employment also fell in construction and agriculture, but was steady in industry.

The unexpected deterioration in the labor market could further dent the ruling Socialists' already grim prospects in the November 20 general elections, which opinion polls indicate are likely to be won by the opposition center-right Popular Party.

The Bank of Spain is due to publish its estimate for economic growth in the third quarter, which will be followed on November 11 by the INE's figures for GDP.

Spain emerged from its worst economic downturn in living memory at the start of last year. But since then growth has remained sluggish, slowing on a quarterly basis in the second quarter to 0.2 percent from 0.4 percent in the first three months.

"Employment contracted at an accelerated rhythm in the third quarter, throwing up more evidence that the economic recovery has come to a halt," Reuters quoted Unicredit economist Tullia Bucco as saying. "The economy is now expected to fall into recession in 2012."

Opposition leader Mariano Rajoy said the figures showing are the foremost reason for a change in government. The 21.5-percent jobless rate gives new wings to the Popular Party (PP), which is expected to win the November 20 elections on the back of the ongoing economic crisis.

"Spain urgently needs a political change; it needs it like it needs to eat, for the good of economic recovery and job creation," said Rajoy at a rally in Avilés. "The worst part is that all the contracts that were destroyed were open-ended, as a result of the Socialists' labor reform."

The bad news also elicited contrite statements from Socialist officials. "The Active Population Survey data are simply intolerable," said Socialist candidate Alfredo Pérez Rubalcaba, citing the need for "state investment in the economy" above and beyond austerity measures.

Labor Minister Valeriano Gómez last week predicted there was a very slim chance of the ranks of the unemployment reaching five million in the third quarter, and conditioned this possibility to an unexpected increase in the size of the active population. The EPA, however, showed that the working population actually fell by 2,100 people, while at the same time the number of jobs lost in the period amounted to 146,800.

The secretary of state for the economy, José Manuel Campa, acknowledged the rise in the ranks of the unemployed was "dramatic" and attributed it to spending cuts by regional and municipal government as part of an austerity drive.

The central government has cut public sector wages, frozen pensions and taken the ax to investment outlays as part of its commitment to trim the country's budget deficit to six percent of GDP this year from 9.2 percent last year.

The all-too-human face of the EPA was evidenced by the number of households in which all members of the family were out of work. This figure rose by 57,700 to a record 1.425 million, more than three times the number at the end of 2007.

Of those fortunate enough still to be employed, over a quarter are on temporary contracts, while the jobless rate for workers under 25 years stood at 45.8 percent.

The highest jobless rate in the third quarter was recorded in Andalusia at 31 percent and the lowest in Navarre at 11.7 percent.