Unemployed Down in Spain but Black Market a Problem for Austerity
The number of unemployed in Spain dropped in May by 76,223, the second consecutive monthly drop. While this is a positive data point, the drop is largely due to seasonal actors and more than 4 million people remain unemployed. Yet, to support austerity, the Spanish government is moving ahead with labour reforms by June 16th whether it has buy-in from the labour unions or not. This will set up a showdown between the socialist government and the unions in the coming days.
In Spain, there is also a large black market for labour (an estimated 23% of GDP). To the degree austerity begins to bite, one should expect an increasing number of the unemployed to move into the black market. The Bloomberg video below explains.
Update: The non-seasonally adjusted data show the number of unemployed rose by 50,987, confirming that the drop in the number is only a seasonal aberration, nothing more.