Unemployed Down in Spain but Black Market a Problem for Austerity

| 2 June 2010 12:06

The number of unemployed in Spain dropped in May by 76,223, the second consecutive monthly drop. While this is a positive data point, the drop is largely due to seasonal actors and more than 4 million people remain unemployed.  Yet, to support austerity, the Spanish government is moving ahead with labour reforms by June 16th whether it has buy-in from the labour unions or not. This will set up a showdown between the socialist government and the unions in the coming days.

In Spain, there is also a large black market for labour (an estimated 23% of GDP). To the degree austerity begins to bite, one should expect an increasing number of the unemployed to move into the black market. The Bloomberg video below explains.

 

Update: The non-seasonally adjusted data show the number of unemployed rose by 50,987, confirming that the drop in the number is only a seasonal aberration, nothing more.

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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