Unemployment benefit payments put deficit target at risk
Unemployment in Spain, already by far the highest in Europe, rose further in September as an increase in benefits and a fall in the number of people contributing to the Social Security system further complicated the government’s arduous task of cutting the public deficit as the country slips deeper into recession.
According to figures released Tuesday by the Labor Ministry, the number of jobless claims rose 79,645 last month from August to 4.705 million. Over the past 12 months, the number of people officially unemployed has risen by 478,535, or 11.3 percent. At the same time the number of people signed up with the Social Security system declined 86,174 to 16.809 million, the lowest figure since April 2004.
At the same time, government outlays on unemployment benefits in August climbed 7.9 percent to 2.651 billion euros and were up 5.7 percent at 21.107 billion for the first nine months. At that rate, spending for the year on unemployment benefits would come in 2.8 billion euros above budget for the full year.
The deficit of the central government and Social Security system together in the first eight months of the year was already 4.77 percent, above the target for the full year of 4.5 percent. The government’s forecasts are looking increasingly like an act of wishful thinking rather than an exercise in pragmatism based on well-founded assumptions. When the government presented the 2012 state budget in March, experts highlighted the lack of credibility of a projected fall of five percent in spending in unemployment benefits compared with 2011 at a time when the country was heading for its second recession in three years.
Although September is traditionally a bad month for the labor market after the end of the peak holiday season, the situation this year has been aggravated by 42,384 people who had previously worked for the public sector exiting the Social Security system as a result of the government’s austerity drive.
While acknowledging that the outlook remains bleak , the government took heart from the fact there was something of an improvement, compared with the previous year when jobless claims rose by 95,817 in September. “In the months of July, August and September, unemployment has also performed better this year than the last, with 90,010 more people out of work, compared with 104,943 in 2011,” the secretary of state for employment, Engracia Hidalgo, said.
According to figures released Monday by the European Union’s statistic office Eurostat, the jobless rate in Spain in August was 25.1 percent, compared with an average for the EU of 10.5 percent and 11.4 percent for the euro zone.