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The world economy is still reeling from rising unemployment rates, but for Spain, unemployment is not a new phenomenon. For decades now, the Spanish unemployment rate has been almost double that of other European countries.
Statistics now show that more than 4.7 million Spaniards had no permanent job and received unemployment checks from the government in early 2012, almost 20.5% of the country’s total population. Before the crisis, though, this figure was rarely under 10%, a relatively high number for a European country, which can mean only one thing: the financial crisis is not the reason behind Spain’s high unemployment rate.
Prior to the economic crisis, the average Spaniard could find work fairly easily, whether it was in a store, a bar, or even a construction site. Being laid off was not too catastrophic – just a week later, another store would be looking for new employees, possibly for even more money. And if a Spanish citizen couldn’t find a job quite that easily, the government would provide unemployment checks until a more suitable job offer came up. These checks, which initially amount to 70% of an employee’s salary for the last six months of work, could provide for Spanish citizens for some time. But the crisis hit the countries which depend on the tourist and real estate sectors particularly hard. People who previously lived well working on construction sites were left without work, albeit with regular unemployment checks. However, the excessive economic security of a country’s citizens, while commendable, threatens the stability of the national pension system, increases the budget deficit, prevents free competition, and leads to greater unemployment. The Spanish economist, Juan Carlos Alvarez, was the first to find some of the reasons behind the large unemployment rate in Spain, and further studies conducted by other economists confirmed his findings.
Reason #1: Young People with No Previous Work Experience Have Great Difficulties in Finding a Job
The universities that produce future Spanish professionals don’t always teach what needs to be taught. Once, a vocational education was a guarantee of employment for the Spanish youth. But while the labor market has changed, educational programs have not. As a result, the so-called “post-employment” students who graduate from these schools have nothing to offer to future employers – it’s no wonder that in 2011, 50% of youths in Spain were unemployed. And while the remaining 50% continues looking for new opportunities, the unemployed neither work nor study. This phenomenon, called “neither-nor”, is now entering its second generation, and because these young citizens are a non-professional labor force, employers don’t want to hire them – the cost of employing them outweighs their practical usefulness.
Reason #2: An Unemployment Check Brings More Money than a Potential New Salary
A majority of unemployed citizens remain confident that, even without a job, they will continue receiving money from the state, a mindset that slows the job hunting process. Globally, a person who is unemployed is someone who wants to work, but can’t find a job. In Spain, however, an “unemployed” person defines someone who is looking for a better job and more money over a period of several years. An unemployed Spanish person could potentially reject numerous offers until they find one which they deem “worthy”. Not that this affects their lifestyle in any way – a large percentage of people without a job continue making expensive purchases, travel, go to parties every weekend, and generally live a very full life. The icing on the cake is the fact that salaries offered at new workplaces are much lower than traditional unemployment checks, a statistic calculated using average salaries in 2006. Why would anyone work for 500 Euros, when he or she could receive 900 Euros doing absolutely nothing?
Reason #3: Current Labor Laws are Complex and Difficult to Amend
The labor laws, which existed until very recently, strictly defined how a person should be hired, for how long, and under what conditions. And a contract had to be signed not only by the boss and the boss’ boss, but by the syndicate and ministry as well. Hiring new employees is a very difficult matter, and firing them was once even more complicated. This kind of legislation was created mainly to “eliminate social conflicts”, not to increase the number of jobs. Now, new legislation has been temporarily added to simplify the firing process and to allow a number of opportunities for improving performance, but these measures are temporary solutions meant to deal with the consequences of current labor laws, not the causes.
Reason #4: “Black” Business Strategies
Small businesses often try to cut costs by hiring an “illegal” workforce, and the problem isn’t limited to just illegal immigrants who are hired. Most waiters, cleaners, and domestic workers work for what is known as “black money” and have no rights within Spain. According to Alvarez, these problems occur because there is a lack of social responsibility and formal control over tax regulations.
Reason #5: Ineffective Employment Centers
Employment centers (known in Spain as INEM) have turned into “unemployment centers”, which dedicate all of their time to bureaucracy. Most of these centers work exclusively on the processing and issuing of unemployment checks instead of searching for job offers from various companies. The crisis brought about several reforms – for example, instead of visiting the office monthly, unemployed Spanish citizens are now able to confirm their status on the Internet. In theory, measures like these should reduce the burden on the staff in these employment centers so that they can return to their original jobs, but this didn’t work out as well as the government hoped. Foreigners, who had been living in Spain for many years, were finally able to return to their native countries and find work there. But they continued receiving unemployment benefits from the Spanish government. The reform also allowed for “unemployment benefits to be combined with other benefits”, such as housing benefits for young people, disability benefits, benefits for families with only one provider, and so on. This led to many nice bonuses for those who already received unemployment benefits, and as a result, many people stopped looking for a job altogether.
Reason #6: The Spanish Mentality
According to Alvarez, the low productivity rate of labor in Spain is a result of “non-Anglo-Saxon work culture and a lack of technological development”. Spaniards agree with this statement – a typical workday, which runs from 10-20 stops for a midday “siesta” that lasts from 14-17. Some religious holidays are also considered national holidays, and if they fall on Tuesdays or Thursdays, workers are given days off on the nearest Monday or Friday. In addition to an official vacation in August, Spaniards have two “celebratory” weeks every year, for Christmas and Easter, and about 5 or 6 long weekends in total. All this time off for celebrating adds up and leads to low productivity.
Reason #7: Foreign Immigrants are to Blame
Up until the year 2011, Spain granted permission for all sorts of foreigners, including African and Moroccan refugees, to stay in the country, and “legalized” the illegals already in the Spain once every four years. Because of this, Spain was host to a large number of unskilled workers who could not even speak Spanish. In essence, the situation is much like the history of France repeated – after a year, an illegal can start receiving unemployment checks, and can then invite another family to do the same. Social policy in Spain doesn’t allow the authorities to restrict unemployment benefits for foreigners; for one thing, they are unemployed, and because they are foreigners, it is much more difficult for them to find a job. In fact, Spaniards often resent the fact that foreigners, as the less-protected section of the population, are a priority when it comes to receiving any kind of social benefits.
Another well-known economist, Pablo Molina, discussed another reason for Spanish unemployment in his blog: during the golden years, when Spain was in a financial boom, Spaniards created a list of priorities that is inapplicable in today’s economy. The youth decided that higher education was a waste of time, many people dreamt of being civil servants, business owners employed extra people – sometimes known as “something managers” – without being able to say why those positions were necessary, what the responsibilities of these new positions would be, or who should perform them. The crisis reversed the effects, however. Workers in non-essential, extra positions were laid off and the application form for any job now required that an applicant be educated.
Author: Valentina Rincon
