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Spain sees historic rise in unemployment as nearly 900,000 lose jobs since coronavirus lockdown

Rise in unemployment exceeds the 2008 financial crisis and the Great Depression of the 1930s

Graham Keeley
Thursday 02 April 2020 12:31 BST
Coronavirus: Most affected countries around the world

Spain has lost an unprecedented total of nearly 900,000 jobs since it went into lockdown to fight the coronavirus outbreak, as analysts predicted the crisis could plunge the country into a depression.

With the world’s second highest death toll after Italy, Spain’s left-wing government has banned almost all outings since 14 March.

Tougher restrictions were brought in this week, banning all but essential workers from leaving their homes.

Health authorities said on Thursday that the number of people who have died rose to 10,003 after a new daily record of 950 fatalities. The total of confirmed cases increased to 110,238 and 26,743 have been cured.

Since the state of emergency was declared, 898,822 Spaniards have now lost their jobs, including about 550,000 temporary workers, according to government data also released on Thursday.

It is the biggest single rise in unemployment in Spain’s history, exceeding those after the 2008 financial crisis and during the Great Depression in the 1930s.

The number of people registered as unemployed rose to 3.5 million in March, the highest level since 2017. However, this figure does not include all the new job losses because not all unemployed workers have registered with the authorities.

In addition, the figures do not include 620,000 workers who have been temporarily laid off in many key industries, such as the car trade, tourism and construction.

“It is always a big problem and it is the double challenge we have: to fight the epidemic and to avoid the economic activity being swept away. We will have to work on relaunching the economy once we have control of the epidemic,” Jose Luis Abalos, the Spanish transport minister, told RNE radio.

March is normally a good month for employment in Spain as it is the start of the holiday season in a country where tourism accounts for 12 per cent of the GDP and 13 per cent of employment.

However, Kate Preston, a British businesswoman who runs nine restaurants with her husband in Barcelona, is very worried about what the future holds.

“I wake up in the night because of this and I am in a happy reality for a few seconds – and then I remember what is happening,” Preston told The Independent. She said the outbreak could not have come at a worse time.

Kate Preston is originally from London but moved to Spain in 1992 (Graham Keeley/The Independent) (Graham Keeley/ The Independent)

All her restaurants have had to shut and she has had to temporarily lay off 150 staff.

“The winter months are not good in the restaurant trade, so you are waiting for things to improve from March onwards. The summer months are the best, when you make the money, but that looks uncertain,” she added.

She said Barcelona’s restaurant trade, which depends partly on tourism, has been hit by a series of setbacks, from rioting in October over the jailing of nine Catalan separatist leaders to the cancelling of the World Mobile Congress in February – an event that usually attracts about 100,000 people to the city.

 I wake up in the night because of this and I am in a happy reality for a few seconds... and then I remember what is happening

Kate Preston

The Spanish prime minister, Pedro Sanchez, has announced that when staff who have been laid off return to work, they cannot be sacked for six months.

However, Preston believes this measure could threaten businesses that have been weakened by the crisis.

“If you have not made any money, then you are forced to make adjustments, which unfortunately can involve sacking people. We don’t want to do that, but if you are not allowed to do so then that can mean businesses go under,” she said.

“This government needs to understand that supporting businesses means supporting workers. They must take some of the fiscal pressure off business.”

Maritza Lopez is a cleaner and her husband, Javier Garcia, is a machinery technician who has just lost his job.

Maritza Lopez with her 3-year-old daughter Angela (Graham Keeley/The Independent) (Graham Keeley/ The Independent)

The couple, who live in Barcelona with their three-year-old daughter, Angela, are among those who are most vulnerable to the effects of the lockdown.

Unable to leave their home, Lopez cannot work, which means they will soon have to depend on Garcia’s unemployment benefit.

“We are OK at the moment. I am only worried about our health right now, and we are OK financially because we have Javier’s unemployment benefit,” said Lopez, who is Peruvian and has Spanish nationality.

“But I have a friend with a child who just does occasional cleaning work and she is in a desperate situation. Her husband is in London and cannot send money back to her.”

Spain’s social security minister, Jose Luis Escriva, said at a news conference on Thursday that the country’s budget deficit is expected to widen “significantly but temporarily” because of the coronavirus.

Speaking at the same conference, the labour minister, Yolanda Diaz, said 2.3 million people are currently receiving unemployment benefits, costing the state about €1.22bn (£1.07bn) a month.

William Chislett, a senior analyst at the Elcano Royal Institute, a think tank in Madrid, said the Spanish economy was slowing down even before the coronavirus outbreak.

“What you have to remember is that we were in a weak position before this. The deficit stood at 1.8 per cent of GDP for this year, but now it could hit about 10 per cent,” he told The Independent.

“Public debt is 100 per cent of GDP, but with all the government money being splashed around at the moment, that is sure to rise. Unemployment is at 14 per cent – double the EU average. Now we can expect a recession or even a depression.”

Chislett believes businesses will be harmed if companies are forced to retain staff six months after they return to work.

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