Why is Spain’s unemployment rate so high?

Spain unemployment

The Spanish labour force survey or EPA‘s data from the first three months of this year are bad. Some commentators may seek to split hairs with the argument that unemployment grew less than in the same quarter in 2012, but that’s a desperate attempt to find silver lines where there is none. The numbers are painful to look at: there are 237,000 more jobless people and 323,000 workers have lost their employment. Some 85,000 people have stopped searching for a job.

The core message of these figures is that the economy is faltering. Worst of all is the loss of jobs, which means there are lower social security contributions and tax income. The 6.2 million of unemployed is brutal, anomalous, and lacks explanatory references among countries with quite similar structures.

It also is the threshold of social failure. In nearly two million households, all family members are unemployed and in 4.5 million households, there’s no one employable. Out of the 17.5 million households surveyed, in 37% there’s no one with a job. The figures for regions or provinces show the situation is even more devastating in specific areas, such as the province of Cádiz, which requires an explanation and a thorough analysis, and a special plan.

EPA is a survey that provides a lot of information for the experts, but it is not an indicator of what is coming. It measures the employment outlook for the three months prior to publication, the synthetic average of the previous quarter. It doesn’t exactly behave as a leading indicator. In this case, EPA didn’t bring us any news, as the records that each month are published by the ministry of Employment have already told us that the number of unemployed rose in the quarter by almost 200,000 people.

The fundamental question here is why does Spain so easily destroy jobs and with such intensity? A reasonable conclusion would be that the system is very flexible and it’s easy to adjust payrolls to the situation, so the economy automatically reacts to recession with drastic falls in employment. But this is not so in the other euro countries, with Italy at the top able to keep jobs in this recession. And the same applies to other paradigm about flexibility: the UK also has problems of growth but it doesn’t destroy employment that much.

Is Spain, there is abundance of expert committees for almost everything, but not to seek an employment model resistant in the current environment. Yet, there is no more urgent and important goal than generating sustainable jobs. Now it’s the time to set up such task group.

About the Author

Fernando Gonzalez Urbaneja
Over 30 years working in economic journalism. Fernando was founder and chief-editor at El País, general editor at the business daily Cinco Días, and now teaches at Universidad Carlos III. He's been president of the Madrid Press Association and the Spanish Federation of Press Associations. He's also member of the Spanish press complaints commission.

2 Comments on "Why is Spain’s unemployment rate so high?"

  1. “Italy at the top able to keep jobs in this recession”? Really? I have family and friends in Italy (although I’m Spanish). If you ask any of them, this is not so. Jobs are also being destroyed there every day and believe it or not, one of my friends is seeking a job in the shoe manufacturing industry in Spain because her job in Italy has cut her hours, her pay, and the owner is thinking of shutting down his business. Many businesses in Italy are literally treating their workers like crap. My friend has many years of experience and her research has brought her to the conclusion that, believe it or not, she is better off working for a shoe manufacturing company in Spain.

  2. That doesn’t make any sense. If people are buying products, the businesses will continue to need employees. If they stop buying then you think they should just keep the employees on forever? Who is going to pay for that? You can’t just employ people at a business that doesn’t have any income!

    Business has to react quickly. The alternative is bankruptcy and instead of cutting some of the jobs, the entire company goes under and everyone gets laid off.

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