Unemployment rate in Spain climbed further in the first quarter of 2013 to set a new record as continued recession and stringent austerity forced firms, particularly those in the public sector, to shed more jobs, official data revealed Thursday.
The jobless rate rose to 27.16 percent from 26.02 percent registered in the fourth quarter of 2012. This beat forecasts for a figure of 26.5 percent.
The number of unemployed breached the six million mark for the first time ever with the figure rising by 237,400 from the fourth quarter to 6.2 million. Employment dropped by 322,300 to 16.63 million in the first quarter. According to the statistical office, the rate of decline in employment has eased compared to last year.
Public sector firms shed 71,400 jobs between the fourth quarter of 2012 and the first quarter of 2013 and thus the number of people they employed fell to 2.85 million. Employment in the private sector fell by 251,000 to 13.6 million people.
The ongoing fiscal consolidation was largely deemed responsible for continued recession in the economy. Also, the stringent austerity aimed at reducing the country's public sector deficit has triggered a spurt in unemployment.
Recently, most of the euro area states have stepped up calls for more growth-oriented policies and less austerity as governments feared a deepening recession would aggravate employment situation.
In a speech on Thursday, European Commission Vice-President Olli Rehn said that the pace of fiscal consolidation in euro area will be halved this year so that there is enough room for the national governments to promote sustainable economic growth and step up job creation while containing the increase in debt.
"The pace of fiscal adjustment should take into account each country's specific economic situation," Rehn told a Conference on Financial Integration and Stability. "In line with this policy, the pace of fiscal consolidation is now slowing down in Europe."
"This year, the structural fiscal effort will be 3/4 of a percentage point of GDP in the euro area - half of last year's figure of 1.5 percentage points," he said.
Prime Minister Mariano Rajoy will present a new package of structural reforms on Friday with an aim to achieve economic growth and create jobs.
Rajoy has requested the EU to relax its deficit target for 2013 to 6 percent of gross domestic product compared to the previous goal of 4.5 percent
However, Spain has little room to compromise on austerity as the country registered the biggest budget gap in the European Union last year, surpassing Greece.
The Bank of Spain estimated earlier this week that the economy probably contracted 0.5 percent in the first quarter, extending the period of recession to seven quarters. This, however, was weaker than 0.8 percent contraction suffered in the final quarter of 2012.
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.