Prime Minister Mariano Rajoy of Spain courted the displeasure of northern European members of the eurozone by extending for another six months unemployment benefits for those out of work for as long as two years. Calling the move “just” in a country whose current unemployment rate nears 25%, Rajoy also said that he was still considering asking for help from Europe to combat cripplingly high bond yields.
Bloomberg reported Wednesday that Rajoy announced the benefit extension as concerns mounted over the possibility of massive demonstrations in the fall. Three years of recession and high unemployment have taken a toll on Spain and on Rajoy’s government’s popularity as he continues to implement mandated cuts.
However, Rajoy has acted against cut mandates before, drawing the ire of European Central Bank (ECB) policymakers by easing some of the steps intended to further tighten Spain’s economy. In March he changed his country’s deficit target only a few hours after he had signed off on a eurozone budget coordination pact, angering officials who were intent on implementing tight austerity measures.
Rajoy, who had campaigned on a very different platform, has found himself putting in place stringent measures to cut Spain’s deficit even as the country’s recession deepens. Both his own and his party’s popularity has waned as a result, even as European officials press for more reductions in benefits and higher taxes.
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The extended unemployment benefits he continued Tuesday were set to expire Wednesday. They had been put in place three years ago to aid the long-term unemployed; as of this June, 1.7 million households were without jobs. Under the extension, eligible Spaniards would continue to receive 400 euros ($491) a month.