Spanish Prime Minister Mariano Rajoy risks irking the European policy makers he needs on his side after he extended unemployment benefits to avoid stoking social unrest.
Rajoy said yesterday his government will continue to make payments to the long-term unemployed, extending for six months a benefit adopted by his Socialist predecessor three years ago that was due to expire today. Rajoy, who reiterated he may consider seeking European help to tame 10-year bond yields hovering near 7 percent, didn’t say how he’d pay for the measure he described as “just.”
Under the extension announced by Rajoy, Spaniards who have run through as much as two years of contributions-based jobless benefits will continue to receive 400 euros ($494) per month. The government hasn’t given an estimate of the price tag of extending the program, which cost 642 million euros for six months at its inception in 2009 when the jobless rate was 18 percent. More than 200,000 people were getting the aid as of June, the Labor Ministry said yesterday.