Spanish PM warns slashing unemployment will be ‘difficult’

Spanish Prime Minister Jose Luis Rodriguez Zapatero warned of a “long and difficult road ahead” to overcome the country’s high unemployment rate despite a recent dip in joblessness.

Spain’s official unemployment rate eased to 19.79 percent in the third quarter from 20.09 percent in the second, official data showed last month, but it is still the highest in the 27-nation European Union.

“The improvement is still so weak that it does not guarantee an irreversible change in the trend,” Zapatero told parliament.

“We have a long and difficult road ahead of us to put the employment situation right and reduce joblessness,” he said.

Spain’s timid economic recovery from nearly two years of recession triggered by the collapse of a property bubble came to a stop in the third quarter amid tough austerity measures, official data showed Wednesday.

Gross domestic product showed zero growth in the three months to September 30 from the previous quarter.

“The recovery will continue in the fourth quarter and should accelerate in 2011,” said Zapatero, adding it is “highly probable” that the government forecasts of a 0.3 percent drop in growth this year will be confirmed.

The government predicts economic growth of 1.3 percent in 2011.

Earlier this year, Zapatero introduced a hotly contested labour market reform that cut the country’s high cost of firing workers and gives companies more flexibility to reduce working hours and staff levels in economic downturns — changes that he argued would boost job creation.

It also intends to raise the retirement age to 67 from 65, another measure fiercely opposed by unions.

“This commitment has no backward move,” said the prime minister, and the plan (on the retirement age) will be presented to parliament “in the first quarter of 2011.”