Tuesday, 8 February 2011

Rising joblessness masks Spain's black economy

14:26 |

Rising joblessness masks Spain's black economy | Top News | Reuters: "Spanish unemployment rose again in January, underscoring the importance of recent reforms designed to boost job creation and the need to increase tax revenue to allay fears that Spain cannot pay its debts.

The number of registered jobless rose by 3.2 percent from December to 4.2 million, the Labour Ministry said on Wednesday. Data last week showed the overall jobless rate at 20.2 percent in the fourth quarter, the highest in the European Union.

Unemployment is Spain's biggest economic headache as it fights to shrink a public deficit of around 9 percent of GDP.

The New Spaniards, 2nd Edition

Economists say the huge unemployment figures point to millions of Spaniards working either cash-in-hand or simply dodging taxes in a thriving black market the government estimates to be worth around 200 billion euros, or 20 percent of GDP.

The Treasury would welcome the extra income to help deflate one of the euro zone's largest public deficits, but cracking down on tax evasion and illegal employment carries a massive social cost for an unpopular government."

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