The Dark Underbelly of Spain’s Jobs Recovery

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Where Did All the Workers Go?

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

Two years ago, the total number of unemployed in Spain, officially speaking, was 5.5 million — the equivalent of 23.2% of the country’s active population. It was the second-highest unemployment rate in the EU, far worse than third-place Hungary (18.5%) but not quite as terrible as Greece (26%).

At that time, Spain was also proud home to the five European regions with the worst levels of unemployment. At the top of the heap was the southern province of Andalusia whose unemployment rate was close to 35%! Even fifth place, Castilla-la Mancha, had an unemployment rate of 29%.

Now, after two years of consecutive quarters of robust GDP growth and an unprecedented tourist boom, things appear to have changed. At last count, unemployment was down to 17.2% — still depression-level, but no longer apocalyptic! For the first time since 2008 the number of unemployed in Spain is below four million. Even in Andalusia things are apparently improving since the region’s ranks of jobless have shrunk by 160,800 in the last year.

This is all welcome news in a country with such chronic unemployment problems, but there are two important caveats: first, the active population in Spain continues to shrink, and that has an important hand in the improving figures; second, almost all of the new jobs that are being created are of the poorly paid and highly precarious kind.

Where Did All the Workers Go?

In the last five years Spain has lost just over 760,000 active people — citizens who were counted as part of the labor market, either as employed or unemployed but actively seeking work. These lost people have moved into retirement age, have left for greener shores where better quality, higher paid work can be found, or they’ve given up looking for work altogether.




This decline in Spain’s active population is of such magnitude that it is responsible for one-third of the total reduction in the unemployment rate between 2012 and 2017, reports Spain’s financial daily El Confidencial:

In 2012 unemployment stood at around 24.5% of the working population, and by the second quarter of this year it had fallen to 17.2%. Of this 7.3% decrease, 4.6 percentage points came from the growth in jobs and the other 2.7 percentage points were a result of the collapse in the activity rate. In other words, a third of the fall in unemployment is due to the shrinking number of people in the labor market.

The brunt of this trend has been borne by Spain’s youngest workers. Ten years ago, the 24-29 age group was the largest segment in the labor market with many employed in the construction and real estate bubble before it collapsed; now it’s the seventh largest. Many of the people in this age group have chosen to upgrade their studies or move elsewhere. More worrisome is the fact that the 30-39 age group has also lost ground over the last five years, since the most logical reason for their statistical disappearance is that they have given up even looking for new work.

Pervasive Precarity

The level of unemployment in Andalusia may have fallen slightly in the last year but conditions remain harsh. According to a new study by Anadalusia’s Youth Council, eight out of ten under-30s who found work in the past 12 months year couldn’t leave their parental home. They simply aren’t earning enough money to rent an apartment and even if they were, their new jobs are unlikely to last long enough to afford them any degree of financial security.

It’s a common problem across the length and breadth of Spain. According to the Spanish daily ABC, of the 1.7 million job contracts signed in December last year, over 92% were for temporary jobs. In April, 28% of the new jobs created had a contractual duration of less than a week. Of the new jobs, 43% lasted less than a month.

There are two main reasons for this trend: one, most of the new jobs being created in Spain are in the tourist and hospitality sectors, which are highly seasonal; and two, the bipolar nature of Spain’s labor contracts.

Since the Franco dictatorship, Spanish workers, many of them now in their fifties and sixties, have had open-ended contracts that are both exceedingly rigid and extravagantly generous when it comes to layoffs. To give companies some degree of hiring flexibility, without completely alienating unions and workers, Spain’s government liberalized the use of temporary contracts in 1984.

Lasting a maximum of two years (at which point the employee has to move on or be given a permanent post), the contracts offer meager protection, miserly layoff payouts, and usually dismal pay.

In the wake of the crisis, the government’s labor reforms made it even easier for companies to hire and fire. The inevitable result has been a two-track labor market that encourages employers to create precarious, short-term jobs and discourages them from hiring young people — or anyone, for that matter — as long-term employees.

Things have gotten so bad that even the Bank of Spain — one of the biggest cheerleaders of the government’s labor reforms — has warned about the threat spiraling wages poses to the ECB’s efforts to ignite inflation in the Eurozone. Even as the health of Spain’s macroeconomy improves and new jobs are created, the number of people struggling to make ends meet continues to rise.

Somehow Spain’s new generation of unemployed, underemployed, badly paid, or “ni-nis” (Not in Employment, Education or Training or NEETs) will soon be expected to maintain over eight million pensioners, who are living longer than ever and are used to earning an average state pension of €906 a month, the second highest (as a percentage of final salary) in Europe after Greece. Yet many of Spain’s young workers cannot even support themselves financially, let alone millions of their grandparents’ generation. By Don Quijones.

Will Spain’s central government blink (again)? Read…  Catalonia’s Independence Strife Turns into Financial Showdown




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  55 comments for “The Dark Underbelly of Spain’s Jobs Recovery

  1. AGXIIK
    Aug 1, 2017 at 3:02 pm

    How do you say
    Soylent Green is People in Spanish

    • Gringo
      Aug 1, 2017 at 4:27 pm

      Soylent green está hecho de personas. #Depopulation is on track.

    • walter map
      Aug 1, 2017 at 4:53 pm

      The way things are going, in a few years the Soylent Green gag will have lost all its humor.

      • kitten lopez
        Aug 1, 2017 at 7:16 pm

        oh man i laughed out loud a huuuge belly laugh for REAL at that one! oh thank you i so needed that! you are HIGHLARIOUS in your horror!

  2. Mike F.
    Aug 1, 2017 at 4:06 pm

    Alpo for the puppies or….

    All the Muzzies went North to Mother Merkel to Germany…

  3. meme Imfust
    Aug 1, 2017 at 4:21 pm

    I though I was reading about the USA from start to finish.

    Oh, wait, it is aint’ on main stream media then it is just your imagination.

    I know a couple that are thinking of moving to Spain because they heard it was just great there. Heard it on NPR.

    • d
      Aug 3, 2017 at 9:07 am

      Spain is like England, New Zealand, and Portugal, great IF you have money and guaranteed long term above average income.

      Otherwise all 4 Really SUCK.

  4. walter map
    Aug 1, 2017 at 4:44 pm

    Evidently those people are no longer considered persons and have been dispossessed. Before they were merely disempowered. Now they been economically disposed of.

    This effect is easily recognized as the natural economic externality of financialization, which seeks to extract economic value rather than create it, thereby liquidating the means for people to support themselves so as to consolidate wealth up the food chain.

    This clearly shows how your overlords (and overladies) are determined to maximize their wealth by using their power to the gradual destruction of the general population, without getting the victims too upset about it all at once.

    They do the same thing in the US: the labor participation rate has been in serious decline for years, as have the official excuses to explain it, again the result of financialized liquidation of the economy.

    It no longer takes a knock at the door in the middle of the night for somebody to become a disappeared non-person. To be sure, overpopulation and related problems are serious, but pretending people don’t exist (in the hope they’ll dispose of themselves to avoid the expense of doing it for them) is hardly the way to solve them.

    • John
      Aug 3, 2017 at 7:49 pm

      Excellent commentary and hard to add to

  5. raxadian
    Aug 1, 2017 at 5:06 pm

    And of course with the rampant corruption cases Spain has, can we really trust stadistics there?

    • walter map
      Aug 1, 2017 at 5:46 pm

      Which country’s economic statistics would you trust, and why?

      Take your time.

  6. michael w Earussi
    Aug 1, 2017 at 5:26 pm

    Don’t worry, the ECB will just print more Euros to bribe Spain into staying in the Eurozone. If they don’t the social unrest could tear Spain apart, and it won’t be just Catalonia threatening to leave.

  7. Manuel Barradas
    Aug 1, 2017 at 5:39 pm

    Welcome to Comunism v2.0 !

    oh wait ! it’s here for twenty years, only now we’re seeing it’s ugly face: deception, desinformation, fake money, broken companies, poverty…..

    Dark humor :)
    Next step chip all people !

    Would only receive their “gubermint fiats” through the “chip” all that welfare state receivers, all those big government jobs

    What would they do ?

    • alex in san jose
      Aug 1, 2017 at 5:49 pm

      We should be so lucky. It’s the new Gilded Age is what it is.

    • chip javert
      Aug 1, 2017 at 7:02 pm

      MB

      Guess you missed out on real communism (read about the tens of millions killed in USSR & China in the name of agricultural collectivism).

      What you have in Spain is pretty vanilla corrupt socialism running out of other people’s money. Same thing is happening, faster and with more excitement, in Venezuela.

      • walter map
        Aug 1, 2017 at 7:24 pm

        No, what you have is unrestrained capitalist financialism blaming the effects of its plundering on socialism.

        The democratic socialisms are doing rather well, and the data clearly show that the less plundered by corporatism the better.

        The facts are undeniable, which explains the need for tight corporate media controls.

      • walter map
        Aug 1, 2017 at 7:32 pm

        “Same thing is happening, faster and with more excitement, in Venezuela.”

        Venezuela has long been the victim of corporatist economic warfare.

        http://www.globalresearch.ca/us-led-economic-war-not-socialism-is-tearing-venezuela-apart/5535633

        It’s number 1 in oil reserves, so naturally it’s a target.

        • chip javert
          Aug 2, 2017 at 12:11 am

          WP

          You can call it what ever you want, still does not change my original statement about communism killing tens of millions.

          You and a couple Hollywood types have to be the only ones calling venezuela something other than socialism (Venezuelans Chavez & Maduro claim it’s socialism).

        • John
          Aug 3, 2017 at 7:53 pm

          I’d agree you are spot on Walter. Call a skunk a kittycat but it still smells the same. Javert must be still a bit wet behind his ears.

      • intosh
        Aug 2, 2017 at 1:42 am

        Oh brother, those are not “real communism”.

        But you are right about Spain: corrupt socialism; socialism corrupted by predator capitalists and corporatists.

        I think the one missing things is you.

    • Hiho
      Aug 2, 2017 at 1:03 am

      Spain socialist? Do not make me laugh, learn some history.

      Spain is a far right oligarchy. It has the lowest social spending in the eurozone. Its ruling party is the heir of the fascists.

      But yeah, socialism. Always socialism is to blame.

      Your corporate elites are laughing their asses off watching how you little guys blame socialism for all your problems.

      Btw I come from Spain.

      • Manuel Barradas
        Aug 2, 2017 at 4:46 am

        “This “garden” in front of a public hospital in Athens consists of 4 small “trees”. No less than 45 gardeners are hired to take care of them. I wonder if they polish all the leaves every day?

        Unmarried daughters of passed away public servants receive a lifelong pension. There are 40,000 such daughters. I believe they probably will not marry any time soon…

        One public department has 50 drivers for one car. That must be a sight to behold.

        The Greek hospitals give their patients pacemakers 400 times more expensive than in the U.K. I bet the pacemaker supplier is laughing all the way to the bank.

        There is a public institute to take care of a lake: The “Institute for the protection of lake Kopais”. A small detail. The lake has been dried out since 1930.

        Six hundred professions in Greece can retire early because of strenuous jobs. Men at 55 and women at 50. Hairdressers, musicians and television presenters are all included.”

        http://www.elmundo.es/elmundo/2011/06/19/internacional/1308472242.html

        http://insideportugal.blogspot.pt/2011/12/rampant-public-sector-in-greece.html

        Never before had so many people been hired by the state, with such salaries, pensions and benefits—to the point where the average government job paid almost three times the salary of the average private-sector job. An egregious but not isolated example was the national railroad company, which had annual revenues of €100 million against an annual wage bill of €400 million, on top of €300 million in other expenses. This is how the average state railroad employee came to earn €65,000 a year.

        btw i come from Portugal and i can see what was made here and in my counsin contry Spain

        Political parties are treating people not as “voters” but as “consumers of political parties”

        But you don’t want to see this because most certainly you’re a public servant

        • Stevedcfc72
          Aug 2, 2017 at 9:05 am

          Hi Manuel,

          Hope you’re well.

          With you living in Portugal are you seeing things getting physically better reference the economy?

          Regards
          Steve
          UK

        • hiho
          Aug 2, 2017 at 10:37 am

          “But you don’t want to see this because most certainly you’re a public servant”

          I am engineer and I work for a private company. So be careful when you make your (wrong) assumptions.

          That being said, if I were you I would go to the doctor so as to check this mental diarrhea that you are showing here.

          And great for Greece! But we are talking about spain right now.

        • Manuel Barradas
          Aug 2, 2017 at 11:50 am

          Hi Steve from UK

          You’ve asked about Portugal, here goes:

          Yes, Portugal economy is improving at plane site ! it’s notorious at the moment !

          Do you ask me if it is sustainable ?

          No its is not !

          The problems Portugal had before the Troika rescue in 2011, got way worst with this socialist/communist government.

          State dependents, regained, the income they’ve lost during the adjustment.
          Keep the dependents happy and you’ll always win elections. They got even more 100,000 public workers (socialist party working for the majority).
          Universal Basic Income now if you have a car more expensive than 25,000€ you can earn UBI, wowwww so cozy those socialists.

          More liabilities, more expense ! Socialist/Communist way of “buying votes”

          One visible thing that is exploding is tourism !

          See this example of what will happen:

          In 2009 I went to “Madeira/Funchal” for the Carnaval, 4 days and bought the trip 4 days in advance ! 250€ (too cheap) normaly ~1000€
          Arrived at the hotel (new one with 2months) the recepcionist offered me a premium suit upgrade.

          Wow! too good to be true

          The next day at the breakfast I realized the explanation for all this: The hotel only had 2 booked rooms !!!!!!!!!!

          Watching MSM they were saying the Madeira Island was full of tourists, for a moment i thought I’ve landed in another island LMAO

          Now imagine in the next downturn which I think it’s around the corner, what will hapen to all those new fancy hotels, restaurants, and so on ?

          Regards
          Manuel
          Portugal

  8. Rates
    Aug 1, 2017 at 5:41 pm

    Isn’t this how Europe is supposed to function? After all some of this people are employed somewhere in Europe. Greater integration means that it should not matter where people are employed? This is like complaining that people moving from California to Texas from one job to another is a minus.

    • walter map
      Aug 1, 2017 at 7:26 pm

      Moving to Texas from just about anywhere is a minus for numerous reasons, some of them economic.

    • Cynic
      Aug 2, 2017 at 4:24 am

      It’s a good point – it is just how Europe was meant to function.

      And from the point of view of social and cultural cohesion it would have been better for Britain to take the unemployed of Spain, Italy and France than the Asian and African masses that it is now filling up with (hello Sharia!).

      However, that would only have accelerated the decline of the Spanish economy and the demographic crisis leaving only Moroccan migrants and Spanish pensioners.

      Perhaps really Spain needs to depopulate completely and the young shared out, the elderly taking a pill to end it all :)

  9. Bob
    Aug 1, 2017 at 6:01 pm

    It’s a problem that will not go away….the regional governments don’t give a dam about there people.they just make up new laws to fleece people.but they would not think about job creation .no they would rather make laws that put people out of work….stupid.

  10. chip javert
    Aug 1, 2017 at 7:38 pm

    Actually, some (not all) governments try to deliver some of what the people demand. Other than socialism, one of the problems is people ask for things with huge-but-obscure unintended consequences (lifetime employment for mon & dad 30 years ago guarantees unemployment for their kids today)…

    …or, try taking away the pensions that earlier earlier workers demanded and politicians granted…

    • IdahoPotato
      Aug 1, 2017 at 10:04 pm

      I guess outrageous executive compensation would also fall under this rubric of people “asking for things” they don’t deserve?

      • IdahoPotato
        Aug 1, 2017 at 10:08 pm

        https://ig.ft.com/bank-ceo-pay/2017/

        The CEO of Banco Santander seems to be doing splendidly well through corporate socialism, where the risks are socialized and the benefits are concentrated.

      • chip javert
        Aug 2, 2017 at 12:16 am

        State supported bank in a socialist system – hard to call that capitalism. It’s simply the socialist state milking the system..

      • chip javert
        Aug 2, 2017 at 12:19 am

        you’re way off subject – the topic was do governments respond or ignore voter demands

        • Manuel Barradas
          Aug 2, 2017 at 8:50 am

          Of course Governments respond to voter demands ! Ask those welfare state receivers or those big government jobs.

          Better have the “taxpayers money” in the bank account at the end of the month!

          Doesn’t matter they are corrupt
          Doesn’t matter they are liars
          ….

          Nothing matters except the money at the end of the month

          Once government spending gets up past 30% it’s game over. Communist state is inevitable. The plebs want their free shit, and the elites are perfectly willing to give it to them.

        • John
          Aug 3, 2017 at 8:59 pm

          Off subject? How so? What Potato said is exactly how it’s going. What subject is Javert demanding we stay tuned to? Smoke and mirrors?

    • Hiho
      Aug 2, 2017 at 1:13 am

      “lifetime employment for mon & dad 30 years ago guarantees unemployment for their kids today”

      This is blatantly false, it is so ludicrous that is not even worthwhile to try to teach you some real economy. As a piece of advice, forget what you have learnt at the university and do not take too seriously what you read in the wsj.

      But please, stop lying. Spain is NOT a socialist system. It is a far right corrupt country where inverted totalitarism prevails. The best expresion of a mix of salvage neoliberalism and old feudalism.

      The system you defend -neoliberalism- has brought this havoc and now you are trying to blame leftism and socialism for it. This is just sooo dishonest.

      • Cynic
        Aug 2, 2017 at 4:19 am

        Actually, it would be best to say that Spain as a whole is ‘clientelist’ – little circles scratching one another’s backs, and as a state that it tends towards authoritarianism.

        Left, Right, it makes little difference – just look at the immense Union corruption, although the Left tell themselves it is revenge for centuries of oppression, and the Right just do what they like because they can, with utter cynicism..

        • hiho
          Aug 2, 2017 at 4:40 am

          It is also clientelist, indeed.

          However, as I said, it is just preposterous to state that Spain is running under a socialist or communist system. Pardon?

          Only (north) americans, having been indoctrinated for decades, could think that this is socialism.

          It is the good old -clientelist- neoliberal system which they have been taught to love, albeit the healthcare and pension system remain public and that somehow is supposed to be communist.

    • intosh
      Aug 2, 2017 at 1:54 am

      Here’s another victim of the neo-liberal’s brilliant scheme. Neo-liberal corrupted the government and the sheeple offer themselves to the predatory capitalists by demanding less government.

      • IdahoPotato
        Aug 2, 2017 at 10:45 am

        It’s an American thing. Whatever we don’t understand or don’t care to understand is “socialism” or “Communism”. And whatever doesn’t suit our narrative is “fake news”.

        • Manuel Barradas
          Aug 2, 2017 at 12:28 pm

          One thing for certain, before Syriza won the elections in Greece, MSM dedicated 15~20minutes to the humanitarian tragedy the the Greek people was sufering.
          After Syriza won the elections the humanitarian tragedy must have ended, because there were no more news.

          What is this regimen narratives called “socialism”, “communist” ?

      • Ben
        Aug 3, 2017 at 9:25 am

        I think this is the best comment of this thread.
        In general, sheeple are supposed to be equal but the “more equal” of them are employed by those corrupt governments. So here is the tragic part as sheeple are divided in two:
        a. neoliberal elite-corrupted-government employees being viewed (and blamed) as communists by exactly those that are…
        b. …the free market precariat, in essence victimized by both sides, asking for less government /more neoliberalism and therefore blamed as conservatives, nationalists or racists!

  11. Cynic
    Aug 2, 2017 at 4:08 am

    Transferring Western, or North American, values on to Spain is often an error.

    It must be borne in mind that what people in Southern Europe generally look for in work is a sinecure: those secure lifetime-contract jobs which Don Q mentions were the great goal of the young. and still are.

    Students would bust a gut sitting qualifying exams time and time again in order to get a place as a ‘functionary’ – and once you were in, you were more or less ‘unsackable.’

    Goodbye hard reality, hello to getting paid even when you more or less do nothing.

    I know this culture very well, as my entire family were and are functionaries in teaching and academia – although one has side-stepped into the other lucrative sinecure of professional (‘radical’ Left) politician.

    My father once had the sinecure of all sinecures: ‘Director of Culture’ for one of the Cajas of the Basque Country – now that’s a paid holiday! He walked into it at 28 due to family connections, as we are an old noble land-owning family. No exams for him…..

    A thoroughly corrupt system, and weighted, since the Crisis, against the young. But they aren’t saints: they just want the old system back, under the flag of being ‘radicals’ and ‘Left’.

    It’s highly amusing really.

    As someone who runs his own show, has to find clients and please them, deal with market fluctuations, etc, I have nothing but contempt for this functionary system. I can say honestly that I wouldn’t take such a sinecure, as it rots the soul.

    • John
      Aug 3, 2017 at 9:14 pm

      Great comment, and its not much different here in the states. We have the bushes and the Clitoons and hell even the deep state where they don’t even need any elections to call the shots

  12. Tony
    Aug 2, 2017 at 9:42 am

    I live in Northern England and we have young and not so young Spanish workers everywhere. They work here, while we all fly off to Spain on our holidays…ha

  13. Allan Wood
    Aug 2, 2017 at 11:36 am

    “Where Did All the Workers Go?” You need a response, Mr Quijones?

    I can provide it. Your “highly qualified” Spanish “workers” (all those oxymorons) work in Switzerland as head internal audit for SFr 6,000 per month gross whereas as Swiss head of internal audit gets some SFr 18,000 gross per month.

    Satisfied?

    • Aug 2, 2017 at 1:05 pm

      How many tens or hundreds of thousands of “heads of internal audit” are there in Switzerland to account for the Spanish workers that have left Spain?

  14. Stevedcfc72
    Aug 2, 2017 at 1:29 pm

    Hi Wolf,

    The UK had an estimated 150,000 Spanish workers in 2013 and went into jobs such as teaching and nursing. Also a huge number in the hospitality trade-hotels-restaurants. That’s just an estimate of the number I bet it’s double that. A big draw for the whole of Europe is our Healthcare system.

    Germany had thousands of Spanish workers who were engineers and nurses.

    Massive shame for the Spanish that all their important talent has to leave their home country and thus not contribute to their taxes. (Brain Drain).

    Regards
    Steve
    UK

    • Aug 2, 2017 at 2:01 pm

      Yes, “brain drain” is a terrible condition for a country. If those people go back after having learned the ropes in other countries for a few years and apply what they have learned in Spain, it could work out. But that’s not likely to happen, from the way it looks now.

      • d
        Aug 3, 2017 at 9:23 am

        They wont the ones that can swing it, are turning up in Australia and NZ having perfected their English in England. Along with their Spanish provided, university degrees.

        Many of them have Spanish loans of various types, they will never attempt to repay, as they are outside the EU tracking system now. Cant blame them for that attitude, their county’s system dumped them, yet expects them to continue fund it from elsewhere.

        The EU seems more interested in importing and uplifting Islamic Economic migrants, than it does providing for its own young people. They are piratically ferrying them across the Med for free.

      • QQQBall
        Aug 3, 2017 at 1:21 pm

        My SIL is French architect living in Londres. Lots of frogs jump to UK for work. The firm my SIL left in Paris is now BK.

        I am headed over to Urope soon. Looking for vacation home somewhere in the south – hoping interest rates skyrocket in next few years…. Portugal has a golden visa program and 10-year no tax period for expat retirees. I am about ready to apply for UK citizenship. The expat exodus from USA will be massive in coming years… Of topic, but oddly some beach areas in Central America are more pricey that beach cities n Florida.

  15. Tony
    Aug 2, 2017 at 2:19 pm

    It’s not just Spain…France has no jobs for the young, neither does Portugal or Italy..England is full of people from those countries, all working hard. So take with a pinch of salt when they talk about how they are recovering…..

  16. Aug 12, 2017 at 3:53 pm

    Spain was a planned implosion, Abengoa killed it followed by a Socialist 3rd world invasion -like Spain needed more unskilled Socialists voters.

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