EU austerity: No quick fix for Spain

 

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It is the one set of figures that European officials fear: the quarterly statistics on unemployment.

For amidst all the sightings of green shoots, the lines of those without work serve as a reminder that the crisis in Europe is far from over.

In Spain, the general unemployment level has risen to 27.16%. It means there are six million without work.

The government in Madrid has tried to draw some comfort from the fact that the rate at which jobs are being shed is slower than in previous quarters. The Prime Minister, Mariano Rajoy, says: "Next year we will have growth and jobs will be created in our country."

It is, perhaps, the fate of leaders that they are destined to live in hope. So far, the government has misjudged the severity of the recession. The economy is expected to decline this year by 1.6%.

Spanish nightmare

In the southern Spanish city of Jerez, unemployment is close to 40%. It is not difficult to find couples like Lorenzo Barba and his wife Yolanda. He lost his job - driving trucks - two years ago. His wife was laid off from the hotel sector.

They are under threat of being evicted from their apartment. They scrape by. The fridge is almost empty. For five months, they have not been able to afford fish or meat for themselves in order to give their seven-year-old son a balanced diet.

"There is no future in Spain,' says Lorenzo Barba.

Lorenzo Barba with his wife and son at home in Jerez Lorenzo Barba and his family are going without food and could be evicted from their flat.

"Three generations are being destroyed - mine, my parents' generation because they are supporting us. And the worst part is what will happen to my son."

And herein lies the Spanish nightmare. For the country to see unemployment decline, it needs growth of more than 2%. No one is predicting that at the moment.

So as Daniel Fernandez Kranz, from the IE business school, points out, it is likely that unemployment will continue rising for three or four more years. That will test the resilience of Spanish democracy.

There is some good news from Spain. Its borrowing costs have fallen to levels not seen since 2010. The country is judged as less risky by investors. The current account is moving towards balance and exports are up.

Daniel Fernandez Kranz says it is a story of two economies. The large companies are benefitting from the lower wage costs but the smaller companies, which are the lifeblood of the economy, are still shedding staff.

And perhaps the most important fact to remember: economic activity is still declining. Tough times still lie ahead for Spain.

French slide?

France is waiting for its unemployment figures, which are also due. They, too, are expected to increase and that will be acutely embarrassing for President Francois Hollande who promised, during his election campaign, to bring unemployment down.

Although some steps have been taken to free up the labour market, it remains a daunting task to set up a new business in France and take on staff.

Start Quote

I call it balancing the budget. Everyone else... austerity”

End Quote Angela Merkel German Chancellor

The fear, in Europe, is that France is sliding into the camp of southern European countries, with little or no growth, rising unemployment and declining consumer and business confidence.

In terms of its influence, no one can remember when France counted for so little in Europe.

Today's figures will only reinforce what I wrote about earlier in the week - the retreat from austerity. Spain will miss the target for cutting its deficit but will discover that Brussels is more relaxed and, most likely, will give Madrid more time.

Growth has replaced reducing debt as the priority. You can sense Angela Merkel's unease about the resistance to austerity when she said: "I call it balancing the budget. Everyone else is using the term austerity. That makes it sound like something truly evil."

Today's figures may persuade the European Central Bank to cut its interest rate and the markets will cheer that.

But today also underlined what the President of the Bundesbank, Jens Weidmann, said this week - that it might take a decade to exit this crisis and that will test democracy, social cohesion and support for the European project.

Information published by the European Council on Foreign Relations found that 72% of people in Spain said they did not trust the EU.

 
Gavin Hewitt, Europe editor Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    +1

    Comment number 195.

    @192kane

    I'm just pointing out that there are countries in EU with low unemployment (eg.Austria: 4.5%) that have some labour shortages that could be filled with Southern Europeans (at least some of them) which could be better for them than just sitting on a bum and waiting for a miracle.

    Some unemployed simply prefer to stay unemployed rather then taking physically demanding jobs.

  • rate this
    0

    Comment number 194.

    #192 kane

    "188.quietoaktree
    I'm not downloading files oaktree, it's not even related to the text written that you've quoted."

    -- How do you know ???????

  • rate this
    0

    Comment number 193.

    Spaniards aren't emigrating within Europe where in many instances (say UK or Netherlands or Switzerland) they are not welcome.

    Those that can are off to booming Latin America where they share language and culture. Mexico, Chile, Colombia, Costa Rica, etc.
    Likewise for Portuguese to Brazil.

  • rate this
    0

    Comment number 192.

    188.quietoaktree
    I'm not downloading files oaktree, it's not even related to the text written that you've quoted.

    189.Mr Naughty
    "There are jobs in elderly care,"
    But there are 27 million people unemployed across the EU. I don't think your solution really addresses the situation.

  • rate this
    0

    Comment number 191.

    #190 Mr Naughty

    -- Strawberries ?

    --after an hour most would be hospital cases !

  • rate this
    0

    Comment number 190.

    As summer approaches so is strawberry picking season in Norway (which isn't EU member but allows EU members to register to work scheme). Great chance to earn some money for suffering individuals of South. You don't need to speak Norwegian to pick up strawberries some basic English will be enough.

    Jobs are really available but many unemployed are simply very picky and fussy.

  • rate this
    0

    Comment number 189.

    @kane

    There are lots of young Southern Europeans without any job. It's much easier for youngsters to move abroad to get a job so why not to work abroad for a year or two till things get better???

    If anybody need any help I can provide websites offering jobs in various European countries. Or just check on official EURES web site (European job mobility program).

    There are jobs in elderly care,

  • rate this
    -2

    Comment number 188.

    #187 kane

    http://www.thejobofmylife.de/fileadmin/user_upload/Downloads/PDFs/The_Job_of_my_Life_Brochure_english_german.pdf

    In English and German --I believe it is Europe-wide.

    -- but learning a foreign language is a no-no for some Brits

    --even for job security at an early age.

  • rate this
    0

    Comment number 187.

    183.Mr Naughty
    "The question is if unemployed of South really want to get a job or just pretend that there are no jobs available around."
    I believe the answer is the former, they really want to get a job and there are none available. The latter suggestion couldn't possibly be explained coherently.

  • rate this
    -1

    Comment number 186.

    #183 Mr Naughty

    --" As Europeans get older there is a massive need for workers who look after elderly."

    --very true -- at present people mainly from Eastern European countries are taking the jobs for full-time home care of the elderly.

  • rate this
    +2

    Comment number 185.

    180.margaret howard
    Not lost in translation but rather part of a conversation I had with a well educated, well spoken German who speaks English rather better than I speak German. I do not quote reports or articles as if they were my own. And as far as using Wki your bubble has definitely been burst as the information marries with their entry. Have you even ever been to Ireland? I live there.

  • rate this
    0

    Comment number 184.

    Greece got it wrong in the lead up to its crisis. It has to be said that Merkel TROIKA made it much worse. Eurobonds from the beginning would have prevented the problem and solved it later. Now, if Merkel wants to save the EZ she is obliged to write-off the part of Greece's debt the measures caused. Less money would have been 'lost' by the Germans if Eurobonds were in effect.

  • rate this
    -1

    Comment number 183.

    @147. Sorry-I-haven-t-a-clue

    There are lots of jobs available in Europe. As Europeans get older there is a massive need for workers who look after elderly. There are lots of job advertisements looking for "elderly care workers" without previous experience.

    The question is if unemployed of South really want to get a job or just pretend that there are no jobs available around.

  • rate this
    +3

    Comment number 182.

    155.margaret howard
    Immigration is by far the driving force on any population growth in Ireland and has been for a number of years. To cover your point about poverty in Ireland, this is on the increase and where as we do not have shoeless children in the street we do have significant poverty with a significant number of people going without to fed their families. As reported in the press

  • rate this
    -1

    Comment number 181.

    #179

    -- "Germany has benefitted from the Euro at the expense of the rest of much of Europe -"

    --the same with the DM

  • rate this
    -1

    Comment number 180.

    170 Chris

    "lessor" was the term used with regards to the failing Euro members"

    Are you sure? In what context?

    There is no such word as 'lessor' in German and the English word 'lessor' means 'Vermieter'

    If you mean the English 'lesser' then QOT is right - it means 'kleiner' in the sense of smaller and not derogatory.

    Oh the dangers of translation (without wiki)

    Gute Nacht

  • rate this
    0

    Comment number 179.

    Germany has benefitted from the Euro at the expense of the rest of much of Europe - while the going was good Germans loved it - now its collapsing and they'll blame anybody else but will not admit the ECB have failed to exercise due diligence over its operation. Time for Germany to pay for the appalling mess it has made in Europe...

  • rate this
    0

    Comment number 178.

    The content of the link in 162/174 is a very dated example used to illustrate processes that go on in our mind when we read. 'He/she needs to learn to write', can be said because QOT's stuff confuses readers about its context. I hope it is not just based on a hatred for Greece or an adoration for Germany, or just digging at other contributors. Not much value if that is the case unless a BBC payee.

  • rate this
    0

    Comment number 177.

    @156. Fulano_de_Tal

    No one force you to buy goods manufactured outside EU. Europeans and Americans buy goods from developing countries and complaining about human rights in the same time. If you feel that human rights are violated buy European substitutes which usually are more expensive.

    Labour conditions in China improved dramatically, much bigger problem is Bangladesh.

  • rate this
    -2

    Comment number 176.

    #170 ChrisL

    -- As far as I am aware, the behavior of Greece (and UK) has poisoned the atmosphere for others in difficulty. It will be a hard sell for Merkel at the next election. Such views are widespread --unfortunately with ample reasons.

    -- The chances were given on a silver plate --and most ´blew it´

    If the sums necessary were much lower -- the German public would cause no problems.

 

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