Construction downturn drives up May unemployment for the first time since 1979

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May is usually a good month for job seekers in Spain, as the tourism sector takes on workers in preparation for the summer high season. But thanks to Spain’s deteriorating housing market, unemployment rose in May for the first time since 1979, largely due to massive layoffs in the construction sector.

Overall unemployment rose by 15,068 in May, taking the total number of unemployed people in Spain to 2,353,575. The consensus forecast is that unemployment will continue to rise this year, and may reach 10% of the active population. In 2009 it could break the psychological barrier of 3 million.

Nearly all of the May rise in unemployment was driven by layoffs in the construction sector, in which 15,500 jobs were shed.

By region the biggest increases in unemployment came from the Valencian Community (6,616), Andalucia (5,885), Catalonia (5,860), The Canaries (5,270), Madrid (3,049), Murcia (1,801), and Extremadura (1,274). It is no coincidence that the unemployment rose the most in regions like Valencia and Andalucia that were heavily reliant on the holiday home market.

Unemployment amongst immigrants, many of whom worked in construction, has increased by 67% in a year. Without a generous safety net for the unemployed, and with fewer private resources than locals such as family, unemployed immigrants will struggle in Spain’s deteriorating economy. Social problems and friction between locals an immigrants is likely to rise.

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