Unemployment

Unemployment in Spain has been one of the biggest issues discussed in Spain towards the end of 2008. In the new year it looks like things are about to change, unfortunately for the worse.

An article on Reuters reports on the rising unemployment in Spain last year and the grim outlook for years to come: “Unemployment at 12.8 percent in November, a 12-year high and by far the highest rate in the European Union, could reach 20 percent of the workforce in 2010 as a slump in construction spreads into the wider economy, economists say.”

Fact is that Spain has enjoyed huge economic growth over the last 10-20 years. The problem is, most of this boom was due to the real estate market. Ever rising prices, and a huge inflow of foreigners buying up property throughout Spain. Wherever you look you could see non-stop construction along the whole Spanish coastline as well as many other major cities around the Peninsula over the last few years.

This obviously led to more and more jobs thanks to peripheral sectors (construction, services, suppliers, etc.). Howevr, with the Spanish property bubble bursting last year, the sector has taken a hard hit. Over 1,000 construction and real estate companies filed for bankruptcy in 2008 alone. Leaving hundreds of thousands unemployed. Most of which fortunately received the dole, at least for some time: “Spain makes payouts of up to 70 percent of salaries for up to two years, depending on how long workers have been paying into the social security system.” But this is not an everlasting stabilization of the unemployment problem: “With nearly 3 million unemployed, many of those laid off during 2008 will come to the end of dole payouts [in 2009] and will struggle to make ends meet in a depressed labour market with no sign of paid work.”

The problems are self-evident: No work means no money and no money means no spending. The situation has resulted in a complete shift in the employment industry in terms of who works where and who gets contracted: “Desperate Spaniards who have lost jobs in construction are taking up work they formerly shunned, from cleaning bars to fruit-picking, displacing immigrants who struggle to find alternative work.” A similar situation in the 1980s resulted in: “social unrest… when high unemployment and low wages led to country-wide demonstrations and violent strikes.”. In most big cities around Spain there have already been several demonstration against corporate giants and “unfair” job cuts in the 4th quarter of 2008. The trend looks like it will continue.

Image by michale under Creative Commons

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