Job Creation in Spain

The Spanish economy enjoyed a prolonged period of high growth between 1994 and 2007, characterised by extensive job creation. From the1960s to thee arly 1990s thenumbe r of jobs in theSpanish economy had fluctuated around a steady level of some 13 million. This led many people to support the idea that the Spanish economy could never break through this ceiling. However, between 1994 and 2007 the labour market saw an increase in employment from 13.3 to 20.6 million workers. This great modernation period brought the Spanish economy historically low interest rates and an expansion of credit facilities, which helped to sustain a vigorous and prolonged path of both private consumption and investment growth. Spain also managed to reduce public debt to a previously unknown level of around 30 per cent, and turned endemic public deficits into surpluses, reaching 2 percentage points of GDP in 2007. Throughout this expansionary process the labour force increased considerably as a result of sustained immigration flows; nevertheless, the unemployment rate converged to average European levels. In this sense, the rate of unemployment fell from around 20 per cent in the mid-1990s to a level of 8 per cent in 2007. For the first time since the first big oil price shock in the 1970s, Spanish unemployment was similar to the averagein theEurope an Union.