Spain unemployment now highest since 1997

The unemployment level in Spain rose to a 13-year high of 20.09% in the second quarter, the government said today, as the job market lagged behind an economy that is still struggling to pull away from the shadow of recession.

Though the rate increased from 20.05 percent in the first three months of the year, the National Statistics Institute (INE) reported that the number of those working actually increased. Still, the overall unemployment rate rose to its highest level since 1997 because of a large increase in the work force.

Spain officially exited recession in the first quarter of this year after nearly two years of economic contraction and has been a focus of concern in recent months, as investors fretted that its bloated deficit and troubled banking sector could necessitate a Greek-style bailout.

Today's report by the INE said that there are now 4.645 million unemployed people in Spain - more than half a million higher than a year ago.

Spain's economy limped out of recession in the first quarter with tepid growth of 0.1 percent but the government still foresees the economy contracting for the year. Spain was one of the last major economies to emerge from recession.