MADRID — Spain's brutal unemployment rate soared to nearly 23 percent Friday and closed in on 50 percent for those under age 25, leaving more than 5 million people – or almost one out of every four – out of work as the country slides toward recession.
Spain's National Statistics Institute reported that 5.3 million people were jobless at the end of December, up from 4.9 million in the third quarter – a jump in the unemployment rate from 21.5 percent to 22.9 percent in the fourth quarter.
For those under age 25, the rate hit a whopping 48.5 percent, and the institute also reported that Spain now has 1.6 million households in which no one has work.
The numbers didn't surprise Spaniards, who are gearing up for another recession after the economy briefly surfaced from a crippling two-year downturn triggered by the 2008 credit crunch and a burst domestic real estate bubble that had supercharged Spain's economy for nearly a decade.
Spain already has the highest unemployment rate in the 17-nation eurozone, where the average jobless rate is just above 10 percent. Ireland holds the No. 2 spot with 14.6 percent unemployment and had to take an international bailout last year.
Javier Pelayo, an unemployed construction worker begging outside a Madrid subway station, said he hasn't had steady work for more than a year. He sat on a piece of cardboard with a handwritten placard reading: "For the love of God, help me feed my son."
"They have evicted me from my house and I've come to the capital to see if my luck improves, but this is how you find me," said Pelayo, 40, who moved to Madrid with his wife and son after losing five years worth of mortgage payments on his apartment because he couldn't make the payments.
Even highly trained professionals have extreme difficulty find work, or anything that pays enough for them to make it on their own in Spain. Katia Linderman Matas, a biologist, said she's looked for years for a job in Spain but will now search in Austria and Germany because she speaks German.
"(In Spain) you have to work nine hours instead of eight with bad conditions and the money isn't enough for you to get by," said Matas, 29. "If I wasn't living with my mother, I don't know what I'd be doing now."
Spain was Europe's top job creator until 2008, and began to emerge from recession at the end of 2010 but is now expected to head into a new one this quarter, and the average yearly salary is only about euro21,000 ($27,600).
Spain's new center-right government said the bad unemployment news wasn't a surprise and that an overhaul of labor laws aimed at spurring job growth will be put into place this month.
"It's a negative report and one that will make the government work with greater intensity," said Deputy Prime Minister Soraya Saenz de Santamaria.
The economy shrank 0.3 percent during the fourth quarter, and the Bank of Spain last month predicted the economy will contract 1.5 percent in 2012. Meanwhile, a survey of 4,576 businesses last week by Spain's Chamber of Commerce showed only 3.7 percent expect to add new jobs in the first quarter of this year. The rest said they would keep employment the same or cut jobs.
Saenz de Santamaria said the unemployment news "will lead the government to accelerate the rhythm of reforms," and experts said the government must make drastic labor law changes to make it easier for businesses to fire workers and negotiate with unions.
Under the current system, people who are laid off or fired must be paid between 20 to 33 days of salary per year worked, and companies can't negotiate directly with their unionized workers because they must adopt wage deals set for entire sectors.
"(Companies) need strategic planning to match workers with the needs of the economy, but even if you reform the labor laws, it's not going to jump-start employment immediately," said Antonio Barroso, an analyst for the Eurasia Group consulting firm. "You need credit, you need the financial sector to improve."
Other analysts think Spain might get a boost from looser labor reforms because most of Spain's businesses have less than 100 employees.
"A lot of these businesses with say three or four workers might hire another person, or they could go from six workers to eight, but they are waiting for the government to make its moves," said Francesc Pujol, an economics professor at the University of Navarra.
The government on Friday unveiled a budget-discipline law that will allow the government to impose penalties on debt-laden regional governments if they run deficits after 2020. Spain's regions – like states or provinces – must bring their spending under control by that year or face possible fines of 0.2 percent of regional gross domestic product, said Finance Minister Cristobal Montoro.
Spain's deficit for 2011 is expected to be 8 percent of national income, 2 points above the former Socialist government's predictions. Prime Minister Mariano Rajoy acknowledged that regional government deficits, most of which are run by his center-right Popular Party, were responsible for 75 percent of the deviation.
Rajoy's government is still committed to reducing the deficit to 4.4 percent in 2012 and down to the EU limit of 3 percent the following year, although with a recession looming, that pledge may prove very difficult to keep.
Since taking office Dec. 23, the government has approved austerity measures to rein in the country's swollen deficit with euro8.9 billion ($11.5 billion) in spending cuts and euro6.2 billion ($8.2 billion) in tax increases.
With so much economic gloom in Spain, 24-year-old Anderson Heras was pondering heading back to his native Ecuador after working for years in Madrid as a waiter.
His most recent job offer was from a restaurant for 10 days per month on contract and the rest under the table in cash. A supermarket said it might hire him if he did a weeklong unpaid tryout.
Government unemployment office worker Iria Regueiros said most people seeking jobs have little hope and aren't qualified enough to find work elsewhere in Europe.
"Spain has broken down," she said. "I don't see a common (European) market. We don't share a common language, our qualifications aren't governed by the same yardstick and in the end we are at the mercy of a system that's been set up more for financial institutions than anything else."
Associated Press writer Harold Heckle contributed from Madrid.