The rise in unemployment in Spain, well in excess of the European average, reflects the sharper cyclical correction in the economy but also the greater elasticity of employment to GDP, due to the marked duality of the Spanish labour market. The return to positive growth rates and the reforms implemented by the government in the last year should help employment recover as of 2012. However, some of the growth in unemployment might prove structural and have negative repercussions on domestic demand and the public finance balances. Thus, further progress on the reform front is crucial
