World Economy

Spain Rebound Leaves Jobless Hurdle Restraining

Spain Rebound Leaves Jobless Hurdle RestrainingSpain Rebound Leaves Jobless Hurdle Restraining

Spanish Prime Minister Mariano Rajoy is finding it hard to sell economic success to voters. While the economy is at the vanguard of growth in the 19-nation eurozone this year, an unemployment rate stuck above 20% is proving an obstacle to building support in polls with an election just months away.

Data on Thursday will probably show the jobless rate fell to 22.5% in the second quarter from 23.8%, according to a Bloomberg survey. That would take it to the lowest level since late 2011, when Rajoy arrived in office with a pledge to bring down unemployment.

Speaking before the latest labor-market data, Rajoy’s top economic adviser said the government is making “fast” progress, while acknowledging that there’s still a political battle to push that message.

“In economic terms, it’s going quite fast, more than half a million jobs a year is quite fast,” Alvaro Nadal said in an interview in his office in Madrid on Tuesday. “Is that fast enough in political terms? That’s a good question.”

The conservative PP government is speeding up tax cuts and trying to lower costs for consumers as it pushes against pressure from the Socialists and the anti-austerity Podemos party and entreats voters to focus on its economic record.

Carrying the baggage of austerity and hit by a number of corruption cases, Rajoy’s party risks losing power to alternative coalitions due to electoral fragmentation, even as it continues to lead in polls. The PP would get 29.1% of the votes, leaving it short of a parliament majority, according to a GAD3 poll for newspaper ABC on July 19. It won 44.6% in 2011.

Reform Pace

Monthly data from the European Union’s statistics office show Spain’s jobless rate was 22.5% in May, the second highest in the eurozone after Greece. Youth unemployment stood at 49%, compared to 22% for the eurozone.

Responding to comments from the International Monetary Fund that Spain needs to take on further reforms to tackle structural imbalances in the labor market, Nadal said the pace of job creation is already impressive. On a quarterly measure, unemployment peaked at close to 27% in early 2013.

Defending the government’s track record, Nadal said reforms introduced three years ago made Spain more flexible and competitive, which should translate into companies taking on more workers at a faster pace. He added that measures to improve training and education for workers have been approved into law, but need more time to be implemented.

“It should be faster, it’s easy to say,” Nadal said. “Of course they finger point at the unemployment level, but that’s the stock. The important thing is if the flow is going well, because then the problem of the stock will be reduced.”