MADRID: Spain's unemployment rate surged to a modern-day record of 26.02 percent in the final quarter of 2012 as nearly six million people searched in vain for work in a biting recession, official data showed yesterday.
The jobless rate climbed from 25.02 percent the previous quarter, reaching the highest level since Spain returned to democracy following the death in 1975 of General Francisco Franco.
The result shattered even the modest expectations of Prime Minister Mariano Rajoy's government, which had been forecasting an unemployment rate of 24.6 percent by the end of 2012.
"Unemployment is projected to remain high during 2013," warned Raj Badiani, analyst at London-based research group IHS Insight.
"The prospect of further deep employment losses is likely to keep the unemployment rate above 26 percent throughout 2013, which presents a significant obstacle to any recovery impetus," he said.
An extra 187,300 people joined the jobless queue, which reached a total of 5.97 million people in the final quarter of 2012, a National Statistics Institute report showed.
There were 1.83 million Spanish households in which every potential worker was unemployed, it said.
The story for young people was even grimmer: The unemployment rate for those aged 16 to 24 soared to 55.13 percent, up from 52.34 percent the previous quarter.
Millions of Spanish workers lost their jobs in the wake of a 2008 property crash, which brought the construction industry to a halt and left the country's finances in a mess, and the labor market has yet to recover.
Spain, the fourth-biggest economy in the 17-nation single currency area, has since embarked on a program of spending cuts and tax rises to save 150 billion euros ($ 194 billion) between 2012 and 2014, prompting mass street protests.
The government has vowed to lower the public deficit from the equivalent of 9.4 percent of annual gross domestic product in 2011 to 6.3 percent in 2012, 4.5 percent in 2013 and 2.8 percent in 2014.
"The near-impossible budget deficit reduction goals in 2013/14 on top of likely further fiscal slippage in 2012 is making it impossible for Spain to claim it has regained control of its public finances," Badiani said.
"Therefore, the lack of fiscal muscle is forcing the government to watch from the sidelines as its labor market is locked into a perennial slump."
In recession since the end of 2011, the economy contracted by about 0.6 percent in the last quarter of 2012, its steepest dive in more than three years, according to a separate report this week by the Bank of Spain.
The Spanish economy suffered as a buying spree ahead of a Sept. 1 sales tax increase evaporated in the final quarter, it said. At the same time, public sector workers had their Christmas bonuses canceled.
Tough financing conditions in the midst of a crisis in the banking sector further crimped activity. Spain's bad loan-laden banks are undergoing a drastic restructuring with the help of a European Union rescue loan of up to 100 billion euros.
Over the whole of 2012, the Bank of Spain said economic output fell by 1.3 percent from the previous year. That was slightly better than the government's forecast for a 1.5-percent contraction.
Spanish unemployment rate shoots to 26%
