Spain announces more austerity as unemployment mounts - Summary

Madrid - The Spanish government on Friday announced new austerity measures as unemployment mounted and the country's economic solidity was being increasingly questioned.

Prime Minister Jose Luis Rodriguez Zapatero's Socialist government said it would save 16 million euros (21 million dollars) annually by cutting the number of public companies and societies by 29 to 77 and by eliminating 32 posts of senior officials in government ministries.

The number of state-owned enterprises will be reduced through mergers and 14 closures, Deputy Prime Minister Maria Teresa Fernandez de la Vega said.

The measures were part of government attempts to bring Spain's 11.2-per-cent budget deficit below the European Union threshold of 3 per cent by 2013, Vega said, pledging that Spain would "do its homework well."

The government announced the new measures shortly after the statistics body INE said unemployment had risen past 20 per cent for the first time in 13 years.

The rating agency Standard & Poor's lowered Spain's credit rating earlier this week, prompting calls from analysts on Zapatero to take urgent action to prevent Spain from drifting towards a Greek-style economic meltdown.

The unemployment rate was 20.05 per cent in the first quarter of this year, up from 18.83 per cent in the last quarter of 2009. More than 4.6 million people are now unemployed in Spain.

Economy Minister Elena Salgado admitted that the unemployment figure was "serious," but said the shedding of jobs had slowed down.

Secretary of State for the Economy Jose Manuel Campa said the government expects a jobless rate of 19 per cent for the entire year, excluding the possibility of the unemployed pool reaching 5 million people.

Spain's jobless rate - twice the European Union average - is seen as one of the biggest threats to the country's economic stability.

The effects of the global crisis were worsened by the collapse of Spain's important construction sector, plunging the country into its deepest recession in 60 years.

The government has adopted massive public works programs, creating temporary jobs for hundreds of thousands of people, but that has failed to keep unemployment at bay.

Another main problem is the country's high debt levels, with public debt standing at 53 per cent and private debt at 178 per cent of gross domestic product (GDP).

The government says the economy will start growing in 2011, but growth is expected to remain sluggish.

Source: Earth Times.
Link: http://www.earthtimes.org/articles/show/321417,spain-announces-more-austerity-as-unemployment-mounts--summary.html.