Spain adds 500,000 jobs as recovery spreads

Spain's economic recovery has put more than 500,000 people back to work over the past year, but the country's broader unemployment crisis continues to fester - and is expected to loom large over a string of critical elections in the months ahead.

According to data released on Thursday, Spain's recession-scarred labour market continues to show signs of improvement. Employment in the first quarter rose 3 per cent compared with the year before, while the number of jobless fell more than 8 per cent.

The unemployment rate also came down compared with the previous year, but rose slightly from the last quarter of 2014, to 23.8 per cent today. More than 5.4m Spaniards are currently out of work.

Spain is now in its second year of post-crisis economic expansion, with most forecasters expecting national output to grow at least 2.5 per cent this year. Economists say the recovery is well-entrenched and nurturing consumer confidence, domestic demand and household spending.

What is unclear, however, is whether the upturn will be sufficient to save the government of Mariano Rajoy later this year, when the prime minister will seek re-election. His centre-right Popular party also faces regional elections next month and in September. Polls suggest it will lose heavily, mostly as a result of voter anger over corruption and the still-unresolved unemployment crisis.

"The first quarter is typically a pretty bad one for employment. But if you look at the underlying trend, it is clear that the recovery continues," said Marcel Jansen, a professor of economy at Madrid's Autonoma university.

Prof Jansen argued the job recovery was likely to accelerate this year, on the back of broader trends driving the Spanish economy.

"What we have now is pretty strong growth in employment in a period when [economic] growth is still weak. Over the next couple of months and quarters, however, we will benefit from low energy prices, the depreciation of the euro and low interest rates. Hopefully, that will give a further boost to both GDP [gross domestic product] and employment."

In a marked change from the early phase of the Spanish recovery, job growth is no longer concentrated in the temporary and part-time sector. According to Wednesday's quarterly labour market survey, employers created 289,700 open-ended jobs over the past year, compared with 174,800 temporary positions.

Mr Rajoy has promised to create at least 1m new jobs over the final two years of his tenure - a goal experts say is now well within the government's reach.

The promise forms part of the government's broader strategy to win back disgruntled voters by pointing to its role in engineering the economic recovery.

Mr Rajoy argues it was the government's economic reform programme, and most notably its labour market overhaul, that helped steer Spain back from recession. Passed in 2012 against furious protests from the opposition and trade unions, the labour market reform made it easier for companies to hire and fire workers, and allowed more wage deals to be struck at factory level, rather than across entire regions.

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