PALMA.—Plans by the government to try and tackle underground employment with the number of people out of work approaching five million people, or more than 21 percent of the workforce, have angered the Balearic Association of the Sell-Employed.

In an official statement yesterday, the association said that it fully agrees that the issue has to be dealt with but they do not approve of the way in which the government intends to go about the crackdown.

Association sources are worried that the plan will only really help those businesses which have been flaunting the employment laws and not the employment market and the economy as a whole.

Underground employment in Spain accounts for close to 82 billion euros, or nearly 8 percent, of Spain's annual gross domestic product, according to Finance Ministry figures.

The Socialist government's plan gives business leaders until July 31, 2011, to voluntarily regularise members of their staff who are currently off the books.

After that date, the fines for violating the law will climb fivefold.
Companies that bring their staff into legal compliance will avoid sanctions but they still must pay the Social Security obligations they had been skirting, the Minister for Employment Valeriano Gomez said, adding that “there will be no amnesty.” The unveiling of the plan came after Friday's news that the ranks of the unemployed reached 4.91 million in the first quarter and that the jobless rate rose almost one percentage point to 21.29 percent, according to the National Statistics Institute survey.

The jobless rate is at its highest level since early 1997, while the total number of unemployed is the highest since these statistics began being kept in 1976.

Another worrying figure that emerged from the survey indicates that the number of households in which all members are unemployed rose by 58'000 in the first quarter of 2011 to nearly 1.39 million.

The unemployment rate among Spain's large immigrant population has risen to almost 32 percent. In Spain, the job destruction associated with the global recession was exacerbated by the end of a decade-long property boom that had made the country the envy of most of Madrid's partners in the European Union.

At present, the unemployment rate in Spain is the highest among the 34 mostly wealthy countries belonging to the Organization for Economic Cooperation and Development.

Asked about the high unemployment rate in the first quarter, Deputy Prime Minister Alfredo Perez Rubalcaba described the situation as “very bad” but said the jobless rate had peaked.

The leader of the Popular Party, Mariano Rajoy, pledged that if he is elected prime minister in 2012 he will take decisions that generate confidence and promote job creation.