Spanish unemployment to swell as public jobs vanish: Euro credit

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MADRID. September 4. KAZINFORM Jerez de La Frontera, a Spanish town of 214,000 in southern Andalusia, is negotiating with unions to fire 13 percent of the 2,000 government workers who absorb 80 percent of its budget. "It's not easy because these are people and families," said deputy mayor Antonio Saldana.

With a quarter of Spain's workforce already jobless, Prime Minister Mariano Rajoy 's efforts to retain investor confidence by shaving more than two-thirds off the nation's budget deficit by 2014 will worsen the highest unemployment rate in the European Union. Ten-year yields at 6.86 percent mean "we can't finance ourselves," Rajoy said on Sept. 1, Bloomberg reports.

"There's going to be less hiring and more firing for the spending cuts to be made," said Ricardo Santos , an economist at BNP Paribas SA in London who sees unemployment climbing to 27 percent next year from 24.6 percent currently. "The more unemployment persists, the more difficult it'll be for the government to meet budget goals and implement reforms."

Television stations, airports, hospitals, schools, fire brigades and social services from Spain 's southernmost tip to the Balearic islands in the east are reducing headcount as Rajoy tasks regions and municipalities with shouldering 60 percent of the cuts needed to reduce the budget shortfall to 2.8 percent of gross domestic product in the next two years.

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