July 23, 2015 / 8:36 AM / 5 years ago

UPDATE 2-Falling Spanish jobless rate raises stakes in election

* Jobless rate falls to lowest levels in over three years

* Helps Rajoy deliver on election pledge to cut unemployment

* But many Spaniards still not seeing benefits of recovery (Adds Rajoy reaction)

By Sarah White and John Stonestreet

MADRID, July 23 (Reuters) - Spain’s jobless rate dropped to its lowest level in over three years in the second quarter, offering a boost to Prime Minister Mariano Rajoy as he seeks to persuade voters that an economic recovery is taking root.

At 22.4 percent, the unemployment rate is still higher than anywhere else in Europe bar crisis-hit Greece and it has not dipped below a fifth of the workforce in five years, even after Spain exited recession in mid-2013.

But it is now slightly lower than when Spaniards last voted in a general election, at the end of 2011, helping Rajoy deliver on a pledge to end his term with fewer jobless.

With voters set to head for the polls again by the end of this year, he is banking on an economic turnaround to win again, though unpopular austerity measures in recent years as well as corruption scandals have hurt his party’s standing.

“We’re very well aware of the still long road ahead of us. (But) we’ve come from causing half of Europe’s unemployment to creating half of Europe’s jobs,” Rajoy said at an event in Madrid on Thursday.

“It’s a big change and it’s a change with a social face, bearing the names and surnames of real people.”

IHS Global Insight analysts Raj Badiani analyst said that while Rajoy’s government was now better placed to defend its pre-election narrative that the recovery was getting more inclusive, a key electoral battle will be to address the current standard of living crisis,

Although the jobless rate was down from 23.8 percent in the first three months of this year, after close to 412,000 jobs were created in the April-June period as summer hiring in the services industry got underway, many Spaniards say they are yet to feel the benefits of this recovery.

Wages have dropped, and even as more jobs are created, many are temporary and precarious.

As a result, many voters have already turned to new parties, such as leftist Podemos (‘We Can’), a movement in the mould of Syriza’s anti-austerity government in Greece and which is seen making big headway in the year-end general election. (editing by Julien Toyer/Jeremy Gaunt)

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