Spain has the worst unemployment problem of any EU country with 24.6% of its workforce idle in May. However, according to Spain’s Labour Ministry, the statistics took a sharp turn for the better in June with a 2.1% reduction in the number of Spaniards filing for unemployment benefit over the May figure.
June marks the start of the summer tourist season in Spain, so employment figures experience a seasonal boost, but the employment situation has been easing since March when unemployment hit a new record of 4.75 million people.
Spain’s secretary of state for labour, Engracia Hidalgo noted: “June is traditionally good for the unemployment queue but we have never reached a decline of nearly 100,000 people. We will have to follow the development of the unemployment figures after this good data for June to verify whether we are turning towards a positive trend".
Spain got into difficulties when a property bubble burst at the height of the global financial crisis. This left the banks with a lot of bad debt, construction workers idle, and projects unfinished because their market value was a fraction of the completion cost. The central government had to provide support to the financial sector and find funding for increased social security costs.
In order to reduce debt and get the country back onto a secure financial footing, the government has had to implement austerity measures in the shape of spending cuts and tax increases. This does nothing to support employment. Spain was also forced to make changes to its employment legislation to make it easier to hire and fire people; reduce severance payments and cut back on inflation-linked pay rises. Naturally, these measures have proved very unpopular with the Spanish people and their unions.