News / Europe

    Unemployment Rises in Spain

    A man offers his queue ticket as people wait in line to enter a government job center in Marbella, Spain, September 2, 2011.
    A man offers his queue ticket as people wait in line to enter a government job center in Marbella, Spain, September 2, 2011.

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    Spain's Labor Ministry says the number of people filing claims for unemployment benefits rose in August, bringing the total to 4.13 million.  European governments, like many around the world, are struggling to bolster economic growth while containing major public deficits.

    The number claiming unemployment benefits in Spain went up by more than 50,000 last month.

    Spain's Labor Ministry says the hike is typical of the month of August but, nonetheless, discouraging.

    "Spain has the largest unemployment rate in the euro area and one of the largest unemployment rates in the world," noted Javier Diaz-Gimenez, professor of economics at the IESE Business School in Madrid. "In fact, our employment rate currently is about twice the euro area average and about three times the unemployment rate in Germany."

    Spain's unemployment rate is more than 20 percent.  For those under the age of 25, it is more than 45 percent.

    But economic growth does not appear to be on the horizon.  Spain, like a number of European nations, is struggling with a major public deficit.

    Greece, Portugal and Ireland have already had to borrow money from their euro neighbors in order to avoid defaulting on their debts.  It has not yet come to that in Spain, and its lawmakers want to keep it that way.

    On Friday, the lower house of parliament approved an amendment to the constitution that will force the government to keep its deficit low in the future.  The legislation is now set to go to parliament's upper house.  The controversial move is aimed at calming investor fears over Spain's public finances.

    Diaz-Gimenez says controlling sovereign debt means hikes in taxes and cuts in public spending, policies that do little to stimulate economic growth.

    "Policymakers in Spain face this hard choice between growth and budget stability, and they are choosing budget stability because it is the lesser of the two evils," added Diaz-Gimenez.

    Governments across Europe and beyond are facing a similar conundrum.

    In Italy, economic experts from around the world gathered for the annual Ambrosetti Economy Forum on Friday.  Worries about recession and slow growth opened the talks, with New York University economist Nouriel Roubini warning of a "significant probability" of a double-dip recession.

    Speaking from the conference, Harvard University Economics Professor Martin Feldstein says the outlook in the United States and across much of Europe is grim, not to mention Spain.

    "The numbers that we've seen recently for the U.S. on manufacturing, on construction, on consumers' sentiment tell me that the odds have gotten much greater, that the U.S. is going to continue to decline, and that we are going to be in a formal recession before the end of the year," Feldstein noted.  "In Europe, again I don't think you can talk about a single outlook for Europe.  Germany is strong, Greece is in terrible shape, Spain has 20-plus percent unemployment.  So some of the countries are already in economic downturn here in Europe."

    The U.S. Bureau of Labor Statistics said Friday that nonfarm payroll employment was unchanged in August, keeping the unemployment rate at 9.1 percent.  14 million Americans are out of work.

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