Portugal unemployment hits record 15%

Unemployment in Portugal, which is carrying out austerity policies under an EU-IMF bailout, rose to a record 15 percent in the second quarter, the INE national statistics institute said Tuesday.

The unemployment rate increased marginally from 14.9 percent in the first quarter, according to the labour force survey, but the 826,900 jobless is a 22.5 percent increase over the year.

The Portuguese government, which is struggling to stabilise strained public finances with the help of a 78-billion-euro EU-IMF debt bailout, has removed job protection rules which took effect at the start of August that could drive unemployment up further but should eventually improve competitiveness.

The government forecasts unemployment will average 15.5 percent this year before hitting a peak of 16 percent next year.

Youths and young adults have been particularly hard hit, with 35.5 percent of those age 15 to 24 without jobs.

Rising joblessness is one of the government’s top concerns as payouts of unemployment benefits make it more difficult to meet its deficit cutting target.

Separately, INE also reported Tuesday that Portugal’s economy contracted by 1.2 percent in the second quarter.

The economy is expected to shrink 3.0 percent this year, according to Portugal’s central bank.