Another Look At Spain’s Unemployment Rate

Another Look At Spain’s Unemployment Rate

Emily wrote a great blog detailing some of the reasons why Spain’s unemployment rate is so high. I thought the ideas she raised were organized and well-put, but in my research of the current state of the Spanish Economy, I found alternative reasons for the high unemployment rate which I believe are of more urgent concern. The term “Mileurista” applies to youth and early adult Spaniards who are either in school or have graduated with training in their respective field of study, but are incapable of earning more than 1000 euros per month.  I’m agree with her statement that Spaniards aged 16-24 are generally financially dependent on their parents (much more so than in the United States) but I disagree however, with the lack of societal pressure of finding a job to be of chief concern here.  During my spanish course this semester, on of the FLA’s came to speak about the Mileurista problem, specifically how many employers are exploiting the under-thirty workers by making them serve for extended periods of time as unpaid interns, or by paying them in ‘trainee grants’ close to or below minimum wage, and all the while their employment is conditional.  They accept such low wages in hopes of their efforts leading them to a full-time contract, but have been let down time after time.  The ease at which Spanish employers can hire and terminate employees is a direct result of questionable legislation enacted by the previous Socialist Party. Youth and young adult jobs are often paid with cash, which could point to flaws in Spain’s measurement and reporting of their Unemployment Rate.

I believe that instead of lack of societal pressure, it is the utter lack of jobs available, unfulfilled contract hopefuls, and exploitative nature of employers that is causing such high employment amongst youth, student, and recent graduate populations.  As for the stagnant GDP growth since the financial crisis, long-term unemployment is forcing the labor force to accept jobs out of their zone of expertise, it’s as if human capital is not being maximized when a computer science graduate is working as a Hostel attendant.

In reaction to the slowing of consumption, particularly domestic demand, Spanish clothing giant ZARA has closed 39 of their retail stores since the year 2008.  Slow sales and sluggish (even negative) GDP growth in the past 6 years has slowed down consumption drastically. GDP for Spain can be seen below.

 

spaingdp

When demand for goods and services falls (as experienced by ZARA for example), so does the supply of goods and services along with the number of jobs the closed-down business eliminate from the economy. With regard to Emily’s opinion on the effect of keeping stores open during siesta, I believe that has a minimal effect, in relation to lower consumption in general, on the revenues to businesses and the number of jobs they can facilitate. Patricia Mallen of the International Business times wrote a blog recently explaining that more than 14,000 buildings have halted construction with no signs that they will resume in the near future. Companies throughout Spain within the hotel and hostel industries are functioning on upper-level management and maids, no middle-level workers or as few as possible.

“Companies are still reducing staff to the maximum, to save on expenses,” “I do not think they will change that mindset with the current growth.”- Clemente Polo, professor of economic analysis at Universidad Autónoma de Barcelona.

I agree with Emily proposing that the unemployment rate is affected by the diversity of autonomous communities and regions in Spain, however I slightly disagree with some of the cultural implications she mentioned.  The unwillingness of employers to hire new employees does not relate to a lack of societal pressure for the youth and students to find jobs.  The fact that 24 year olds are still living with their parents and depending on them financially is not a result of lack of pressure or the seriousness with which they search for jobs, it is a result of desperation.  When a college grad is unable to find a job for a year, two years at a time, and any job they do have is underpaid and not promised for tomorrow, they have no other choice then to live with their parents. The slow-growing economy and barren job market is making them unable to fly the coop!

- Jonathan Garcia

 

http://www.ibtimes.com/its-long-way-recovery-spains-unemployment-rate-remains-26-despite-gdp-growth-predictions-1577504

http://www.tradingeconomics.com/spain/gdp-growth

http://fistfulofeuros.net/afoe/spain-the-land-where-incipient-deflation-becomes-good-news-for-headline-gdp/

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One thought on “Another Look At Spain’s Unemployment Rate

  1. letitgoeverythingisawesome

    Nice post. Too bad all of the economic evidence suggests that professional sports don’t really help a city’s economy. Otherwise, having both teams in the Champion’s League final would mean a huge payoff for Madrid.

    Reply

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