Spain takes new steps to fight unemployment

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New measures include handing out unemployment benefits and providing incentives for companies to hire an unemployed person and reduce working hours.

MADRID – Spain's socialist government approved a fresh package of measures Friday aimed at fighting the sharp rise in unemployment in the country, which has reached the highest level in the European Union.

The measures include subsidies for companies that hire an unemployed person as well as lower social security payments for firms that reduce working hours instead of dismissing workers, the government said in a statement.

Incentives will also be provided to companies that hire workers on a part-time basis while those who are temporarily laid off will now be able to collect jobless benefits.

The measures will come into effect immediately and cost state coffers around EUR 1.57 billion, Deputy Prime Minister Maria Teresa de la Vega told a news conference.

"These are six measures, which have been analysed by the government and its social partners, are destined to provide an adequate coverage to the unemployed and encourage the creating of new jobs," the statement said.

The number of unemployed in Spain jumped by 154,058 in February over the previous month to nearly 3.5 million, the highest number since 1996, when the current method of calculation was introduced, the labour ministry said Tuesday.

The jobless total more than doubled between February 2008 and last month, rising by 1.66 million, it added.

The figure for the number of registered unemployed is separate from the unemployment rate, which is released quarterly and stood at 13.9 percent in the fourth quarter of 2008, the highest rate in the 27-nation EU.

Formerly one of the eurozone's chief engines of economic growth and job creation, Spain suffered an abrupt change of fortunes last year when the global financial crisis hastened a correction that was already underway in its key real estate sector, once the driver of its decade-long economic boom.

The government predicts the economy will shrink by 1.6 percent this year after expanding by 1.2 percent in 2008, while the unemployment rate will rise to 15.9 percent this year before gradually starting to fall.

But Spain's second-largest bank, BBVA, issued a study on Tuesday that predicts the number of jobless in the country will rise to 4.1 million this year and hit 4.5 million in 2010. It predicts Spain will end the year with an unemployment rate of 17.7 percent, which will rise to 19.7 percent in 2010.

The sharp jump in unemployment has pushed the issue to the top of Spaniards' concerns, according to polls, amid media reports that rising numbers of families are losing their homes and soup kitchens are getting busier as jobs become scarcer.

AFP / Expatica

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    on 9th March 2009, 11:08:22 - Reply