Spain's jobless rate may be high for four years: minister

6th September 2010, Comments 0 comments

Spain may have to wait four years before its soaring jobless rate, the eurozone's highest, drops to where it was before the economic crisis, the outgoing labour minister said on Monday.

"To be able to halve the unemployment rate and bring it to pre-crisis levels, we will need three or four years, if things do not go wrong," the minister, Celestino Corbacho, told Cadena Ser.

"We are emerging from two years when we experienced a destruction of jobs as a consequence of the crisis and now employment is starting to behave more in terms of seasonality," he added.

Spain's unemployment rate has risen each quarter since it dipped to 7.95 percent in the second quarter of 2007, its lowest level since the country returned to democracy following the death of right-wing dictator Franscisco Franco in 1975.

The rate hit 20.09 percent in the second quarter of this year, up from from 20.05 percent from the previous quarter, according to the National Statistics Institute.

Spain's accession to the eurozone in 1999 ushered in an era of historically cheap credit that spawned a massive building boom that fueled economic growth.

But since the onset of the global financial crisis in 2007 precipitated the collapse of its credit-driven economic-growth model, the country has shed jobs as rapidly as it created them in the previous boom years.

The country entered recession in late 2008 and only emerged with tepid 0.1 percent growth in the first quarter of this year.

Last week Corbacho, the architect of tough reforms aimed at slashing record joblessness, announced he is to quit his post to help the ruling Socialist Party in regional elections in Catalonia in northeastern Spain.

© 2010 AFP

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