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Spain announces budget reform as jobless rate soars above 5 million (VIDEO)

Spain's unemployment worsened in the 4th quarter, up to 5.3 million people from 4.9 million.

Spain unemployment 270112Enlarge
People leave a government employment office in Malaga on January 27, 2012. Spains unemployment rate shot to 22.85 percent in the final quarter of 2011, the highest in the industrialized world, as jobless numbers hit 5.3 million. Graffiti reads "Worker's pride." (Jorge Guerrero/AFP/Getty Images)

Spain has rolled out its budget reform today, as the jobless rate soared above the 5 million mark in the 4th quarter — the highest rate of unemployment in the 17-country eurozone. 

Spain’s National Statistics Institute reported that 5.3 million people were jobless at the end of December, up from 4.9 million in the third quarter, the Associated Press reported. The country's unemployment rate jumped from 21.5 percent to 22.8 percent in the fourth quarter.

Spain announced a budget overhaul on Friday, unveiling reforms that increase oversight of public accounts and penalties for overspending, according to Reuters.

The bill's central aims include reducing the public debt to GDP ratio to 60 percent and the deficit to zero by 2020, Treasury Minister Cristobal Montoro told a news conference after a cabinet meeting.

"The reform is necessary to help to return to growth and create jobs as soon as possible, and steer the country out of crisis," Montoro told reporters, adding that the regions had signed up to the pact.

More from GlobalPost: Unemployment: How does Spain cope? 

Some are concerned that Spain's Prime Minister Mariano Rajoy will be unable to meet his pre-election pledge to cut the country's deficit to 4.4 percent of GDP in 2012. Spain’s deficit for 2011 is expected to be 8 percent of national income, the AP reported. 

The Bank of Spain predicts the country's economy will shrink by 1.5 percent this year, saying the eurozone debt crisis has destroyed business confidence.

The average unemployment rate in the eurozone a little above 10 percent; the next highest unemployment rate goes to Ireland, with 14.6 percent joblessness, the AP reported. In addition, almost half of Spain's 16 to 24 year-olds are jobless, BBC News reported

More from GlobalPost: Spain’s brain drain pain: young talent heads abroad for a better future

Spain is the eurozone's fourth largest economy on the Euro, but hit a crippling two-year recession in that same year, triggered by the international financial crisis and the bursting of its real estate bubble.

"The (budget reform) goes in the right direction and will help restore confidence in Spain's economy. But the most important thing is the (upcoming) reform of the financial system," Rafael Pampillon, a director at the Instituto de Empresas business school, told Reuters. 

http://www.globalpost.com/dispatch/news/regions/europe/spain/120127/spain-budget-reform-jobless-rate