Spain today said that its jobless rate surged to a 13-year record above 20% at the end of 2010, the highest level in the industrialised world, as the economy struggled for air.
It was more bad news for an economy fighting to regain the trust of financial markets and avoid being trapped in a debt quagmire that has engulfed Greece and Ireland and now menaces Portugal.
Another 121,900 people joined Spain's unemployment queues in the final quarter of the year, pushing the total to 4.697 million people, said the national statistics insititute INE.
The resulting unemployment rate was 20.33% for the end of the year - easily exceeding Prime Minister Jose Luis Rodriguez Zapatero's target of 19.4%. Spain appears to be stuck in a rut of staggeringly high levels of unemployment.
After posting a jobless rate of 18.8% in 2009 and now 20.33% in 2010, the government is forecasting 19.3% for 2011 and 17.5% in 2012.
The Spanish economy, the European Union's fifth biggest, slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of a labour-intensive construction boom.
It emerged with tepid growth of just 0.1% in the first quarter of 2010 and 0.2% in the second but then stalled with zero growth in the third.
Zapatero has said the fourth quarter will show positive growth which would pick up steam in 2011 but he warned that job creation would be 'far from what we need and desire. It will be slow and progressive'.
Madrid estimates 70% of the two million jobs which were lost in Spain since the start of the economic downturn were directly or indirectly related to the construction sector.
Last year the government introduced a hotly contested labour market reform that cut the country's high cost of firing workers and gave companies more flexibility to reduce working hours and staff levels in economic downturns - changes that it argued would boost job creation.
Spaniards see unemployment as Spain's biggest problem and one in two, 49.8%, fear the jobless situation will get worse, a poll published by the CIS research firm this month showed.
Spain agrees plan to raise retirement age to 67
Spain's government said today it had agreed to raise the retirement age to 67 from 65, a bitterly fought reform aimed at repairing public finances and soothing financial markets.
Closely watched by investors as a sign of Madrid's determination to keep long-term spending on track, the outline deal was reached after one and a half months of talks with unions and business chiefs.
An agreement between the government and the country's two major unions, UGT and the CCOO, was reached in the early hours of the morning ahead of a cabinet meeting.
Under the outline agreement, the retirement age will be gradually raised from 65 to 67, but with a list of exceptions. These include- special treatment for women who stop work to look after children; retirement before 67 for workers in dangerous or arduous jobs; full pension at 65 for workers with 38 and a half years of contributions, and lower pensions for those who retire at 65 with fewer contributions.; early retirement from 63 but with a lower pension for those who have at least 33 years of contributions, and retirement from 61 in 'crisis situations' for those with at least 33 years of contributions, also at less than full pensions.
The reform will be implemented between 2013 and 2027, with an extra month of contributions each year for the first six years, and an extra two months a year of contributions.
The reform is a critical part of Madrid's campaign to regain market confidence and avoid being trapped in the debt quagmire that swamped Greece and Ireland. The government says that without any reforms it can pay all the pensions only until 2030.
It warns that by about 2050 the number of people aged 65 or more will have doubled to account for 32% of the population. The Labour Ministry says the number of pensioners in Spain is expected to rise from eight million now to 12 million over the next 30 years.
Working more years, Madrid says, is the only answer.
Spain is among the eight European Union countries with the highest long-term budgetary cost of aging through 2060, according to the European Commission.
