Unemployment will drop to pre-crisis levels in 2019: Spanish bank

Unemployment will drop to pre-crisis levels in 2019: Spanish bank
80 percent of inequality cases in Spain are related to unemployment. Photo: AFP
Spain will return to its pre-crisis level of unemployment at the end of 2019 if growth continues at the current pace, Spanish bank BBVA has predicted.

Before 2008’s financial crisis began, Spain's unemployment rate stood at around 8 percent while the latest 2018 studies put the figure at 15.8 percent.

This is still a far cry from the record levels reached in 2013, when unemployment skyrocketed to almost 27 percent.

According to the macroeconomic analysis branch of Spanish megabank BBVA, Spain’s job growth is “notable” given that 86 percent of the jobs lost during the crisis years have been recovered.

Rafael Doménech, head of the group dubbed BBVA research, told Catalan daily La Vanguardia that at the current growth rate Spain would return to its 2007 pre-crisis level of employment by 2019.

The research group also found that 80 percent of inequality cases in Spain are related to unemployment, adding that job creation is “essential” to guarantee a more inclusive Spanish society with higher living standards.

Doménech also explained how an increase in productivity would lead to a drop in temporary job contracts as full-time positions have been proven to be 15 percent more productive.

Even BBVA Research’s most cautious forecast, which takes into account protectionism and political instability, puts growth for 2018 at 3 percent and 2.5 percent for 2019. 

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The banking group added that Spain needs to reinforce its fiscal space to face potential recessions in future and improve the sustainability of the welfare state in the face of the country’s aging population.

Spain has seen considerable improvements to its crippling unemployment rate since peaking at 26.3 percent in 2013.

In 2016 the jobless rate had dropped to 19.6 percent and in August 2017 it stood at 17.1 percent. 

But some, including Spanish trade unions reported that the labour market was still suffering the effects of the crisis and austerity measures implemented by Prime Minister Mariano Rajoy's government.

“Jobs are increasingly temporary and in December just four out of every 100 contracts signed were long-term and full-time,” UGT said in a statement in January. 

According to Spain’s labour ministry, some 19.6 million temporary contracts were signed last year, up 7.1 percent from 2016, while just 1.9 million long-term contracts were handed out, a 12.6 percent rise.