* Unemployment rate edges up to 26.03 percent in fourth
* Number of unemployed falls while workforce shrinks
* 4th quarter GDP growth rate picks up to 0.3 percent
By Paul Day
MADRID, Jan 23 Spain's already crippling
unemployment rate inched up in the fourth quarter, adding to
signs that the labour market will persist as the weakest link in
an economy moving on to a sounder footing.
The number of people without jobs fell at the end of 2013
from a year earlier, the first annualized drop in six years,
according to data from statistics institute INE.
But more than a quarter of a million people left the
workforce over the year, meaning the rate of unemployment rose
marginally to 26.03 percent - the second highest in the European
Union after Greece.
Spain's economy emerged from recession in the third quarter
with quarterly growth of 0.1 percent, and the Bank of Spain
reinforced expectations on Thursday that it was gaining
The central bank said it saw gross domestic product rising
0.3 percent on a quarterly basis between October and December.
Recent data suggests overall output will expand more than
the government's forecast of 0.7 percent this year, fuelling
market appetite for the country's debt and listed shares.
But an upturn in the jobs market remains a distant prospect.
Spain's economy has been in a slump since 2008 when a burst
property bubble put thousands of labourers out of work, and the
aftershock claimed millions more jobs across the country.
The length and depth of the slump has prompted many
long-term unemployed to leave the workforce altogether, either
to seek opportunities abroad or return to education.
Spain's workforce shrank last year to 22.654 million, levels
not seen since the start of 2008, Thursday's INE data showed.
The number of part-time contracts rose while full-time jobs
fell, casting doubt on the quality of new jobs being created.
"Job quality, in terms of the type of contract and salaries,
continues to fall," Maria Angels Valls, professor of management
at ESADE business school, said in a research note.
YEARS WITHOUT WORK
Investors heartened by the brighter economic picture have
charged back into Spanish debt over the last year, after pushing
Madrid close to taking a sovereign bailout on concerns it could
not control its finances.
Its debt yields fell to near eight-year lows on Wednesday as
the sale of a new bond drew bumper demand.
Prime Minister Mariano Rajoy has pledged that households
would soon feel the effects of the turnaround, but for now it is
leaving millions of Spaniards in its wake.
Tighter public debt targets have led to deep austerity
measures, and evidence is mounting that the jobless rate will
not drop significantly for years.
Almost a quarter of all unemployed in the 28-country
European Union live in Spain, while well over half of Spain's
jobless are considered long term having been out of work for
more than a year.
Also, 55.1 percent of under-25s who are available for work
have been unable to find a job.
The number of homes in which all members eligible to work
cannot find a job rose in the fourth quarter to 1.8 million.
Researchers at the Carlos III University in Madrid expect
the unemployment rate to hold above 25 percent this year before
inching down to 24.4 percent by the end of 2015.
"The estimates highlight that the reduction of the
unemployment rate will be slow, despite any possible
consolidation in the economic recovery," they said in a note.
The government has forecast net job creation in 2014, but
economists at the university said only that job destruction
would practically cease while new jobs would be slow to emerge.
SHREDS OF HOPE
The central bank said there were some hopeful signs in the
job market. In the fourth quarter, the number of employees
paying into the social security system rose 0.4 percent from the
third, the first rise since early 2008, driven by the services
sector and agricultural jobs.
Spanish companies have also been hailing a turnaround in
business levels in recent months after years of downsizing, with
Banco de Sabadell, Spain's sixth-biggest bank,
reporting profit tripled last year.
Companies outside Spain have started to pour investment back
into the country, notably Latin American ones in areas such as
banking, travel, food and other consumer-related sectors.
However, the renewed fervour is likely to take time to feed
through in to the working population.
"There's a difference between Spanish companies' optimism
over the jobs' market recovery and the reality," said Juan
Urdiales, co-founder of social media recruitment website
"They'll say that 2014 looks better, but when you ask them
if they plan on hiring this year, they'll say, 'no, no, no, our
plans are the same as last year.'"