Spanish unemployment rate drops to lowest in nearly seven years

Spain has entered a new phase of political uncertainty with the formation of a minority government that could be blocked at every turn by the opposition.

By: Reuters | Madrid | Published:October 27, 2016 2:07 pm
spain, spain unemployment, spanish unemployment, spain economy, spain pm, mariano rajoy, unemployed people spain, spain jobless people, spain news, world news Spain’s incoming government – expected to be formed on Saturday after several parties agreed to step aside and allow conservative leader Mariano Rajoy to govern – will be under pressure to help extend the labour market recovery. (Source: Reuters Photo)

Spain’s unemployment rate fell to its lowest level in nearly seven years in the third quarter, hitting a still hefty 18.9 percent but pulled down by temporary hires during a record summer for tourism, official data showed on Thursday. The jobless rate was the lowest since the fourth quarter of 2009, down from 20 percent in the previous three months, according to the National Statistics Institute (INE). Spain’s incoming government – expected to be formed on Saturday after several parties agreed to step aside and allow conservative leader Mariano Rajoy to govern – will be under pressure to help extend the labour market recovery. Job creation has continued at a strong pace throughout 2016 even in the absence of a fully-functioning administration, after two deadlocked national elections since last December left rival parties bickering over how to govern together.

Watch what else is making news

But concerns have grown over Spain’s over-reliance on temporary hiring and the fragility of the turnaround. The unemployment rate remains the second highest in Europe after Greece. The jobs spurt in the third quarter was almost entirely fuelled by short-term hires, chiming with the seasonal recruitment usually driven by restaurants, hotels and resorts during the summer months.

The percentage of temporary staff hit almost 27 percent, its highest level since the end of 2008, INE said. That trend could persist in the months ahead, some analysts warned, as Spain enters a new phase of political uncertainty with the formation of a minority government that could be blocked at every turn by the opposition.

“Firms could pursue more cautious investment and employment plans in the face of lingering political mess and a widening spectrum of risks triggered by the fallout of the Brexit vote,” IHS Global Insight analyst Raj Badiani said in a note, referring to Britain’s decision to leave the European Union. The number of unemployed fell by 253,900 people from the previous three months, or by 5.5 percent, INE said, a slightly slower fall than the one registered in the same period a year ago. But job creation was stronger quarter-on-quarter than in the same period in 2015, rising 1.24 percent or by 226,500 in July to September from the previous three months.