Geopolitical and Economic News and Analysis

Millions of Jobless Desperate in Spain

Global Geopolitics & Political Economy / IPS

By Alberto Pradilla

MADRID, Aug 17 2012 (IPS) – The sun is shining in Spain as it does every summer. But millions of people in this crisis-stricken country are living in the shadow cast by Europe’s highest unemployment rate.

That is true for José Manuel Martínez, who was taking part in a protest in Madrid holding up a homemade sign reading “I want a job, not charity.”

Martínez, a 45-year-old from the southern city of Sevilla who has been unemployed for three years, told IPS “I have lost hope.”

Like him, nearly 4.6 million of Spain’s 47 million people were without work as of late July, one of the months when the tourism industry tends to generate more jobs in this southern European country.

On Tuesday Aug. 14, the right-wing government of Prime Minister Mariano Rajoy was forced to rectify its plans, and announce the extension of a 400 euro (495 dollar) monthly subsidy for thousands of people whose regular unemployment benefits have run out and whose annual income is less than 75 percent of the minimum wage of 7,700 euros (9,480 dollars) a year.

The extension of the supplementary benefit was announced the day before it expired, in the face of pressure from political and social sectors across the ideological spectrum.

But the government is expected to make the conditions for eligibility for the benefit tougher when the cabinet makes the extension of the measure official on Aug. 24 – which will plunge more families into poverty.

Martínez may soon become one of the beneficiaries of the monthly stipend. “I don’t even visit employment offices anymore,” he said with a heavy heart.

The last job he had with social security coverage was three years ago, when he worked as a bus driver in his hometown, 500 km south of Madrid.

Since then he has only had sporadic short-term jobs, which barely help cover emergency costs. “I’m fed up,” he said. His wife is also unemployed. He said she used to earn some money cleaning houses, but no one calls her anymore.

In Andalusía, the southern province of which Sevilla is the capital, one million people are out of work, giving it an unemployment rate five percentage points higher than the record national rate of 24.6 percent in late July – the highest rate in the European Union, where the average is 10.3 percent.

“Half of the city has my resumé. I have tried everything. But those of us who are getting older aren’t hired anymore,” he complained.

He and his wife scrape by on a 426 euro (525 dollar) a month unemployment benefit, which runs out in October.

If Rajoy had not backed down on the plan to scrap the monthly subsidy, the Martínez family would have become destitute. “I can see myself on the streets,” said the slightly built Martínez, whose anger was focused on the government in office since December.

“They’re doing everything backwards,” he said with a hardened face. “They should generate more jobs, but instead there are more and more unemployed people. They cheated us, because Rajoy promised to fix the unemployment problem if he was elected.”

In Spain, unemployment benefits last for a maximum of two years, for those who have paid into the social security system for at least 12 months. In the first six months, the benefit amounts to 70 percent of the average wage drawn by the worker in the last few months on the job. After six months, it goes down to 60 percent.

But the main target of criticism by the Spanish trade unions are the labour reforms approved by parliament in early March, which triggered the first general strike against Rajoy, on Mar. 29.

The reforms made it easier to dismiss workers and cut wages, limited temporary work contracts to two years, and reduced severance pay from 45 days of pay per year worked to 33 – or 20 if the business has faced losses over three consecutive quarters. It also reduced the cap for severance pay to two years’ wages, from 3.5 years.

And a new measure, approved in July, reduced unemployment benefits after six months from 60 percent of the basic salary to 50 percent.

The reforms have led to an exponential increase in unemployment.

According to the National Statistics Institute, there are now 1.5 million families in Spain in which every single member of working age is unemployed, while more than 50 percent of all young people are jobless.

As a result, one out of four children in Spain is now living below the poverty line, according to UNICEF, the U.N. children’s agency.

But the government is not willing to reverse its austerity measures. It says the reforms and drastic cutbacks are necessary to boost economic growth.

However, the economy contracted one percent in the second quarter of the year, compared to the same period in 2011.

The labour reform was also one of the conditions outlined in the memorandum of understanding signed Jul. 20 by Madrid, to receive a 100 billion euro (123 billion dollar) bailout from Brussels for Spain’s banks.

Many people in Spain complain that the government worried about rescuing the financial sector, with a loan whose costs will be paid by taxpayers, while it has failed to obtain funds to guarantee the provision of basic services and revive the economy.

“I draw 426 euros in (unemployment) benefits, but my mortgage payment is 1,500 euros (1,850 dollars). How can I possibly make it?” said Mario Gómez, 41, who lives in Riosa, in the northern province of Asturias.

For years, he ran a rural tourism business in a mountainous area in his province. He asked for a bank loan to keep his business going. But the crisis put an end to his dream, and his company went under.

Now he hopes the bank will allow him to defer his mortgage payments, so he doesn’t lose his home as well.

“This is going to end badly. People are going to die here, if no one comes up with a solution,” he told IPS with desperation in his voice.

Gómez was one of the thousands of unemployed people who reached Madrid on Jul. 21 after a march from different cities around the country, to demand the revocation of the labour reforms, and call for more assistance for the jobless. Many walked long distances to rally in Madrid.

“With so many cutbacks, it’s impossible to create jobs,” said Charo Domínguez, from the town of Langreo, also in Asturias. Her last job, as an administrative assistant, ended in January. Her unemployment benefits have run out, and she now gets by on the 400-euro supplementary subsidy.

Thanks to support from her family, she is able to continue paying rent. “But I’ll go back to my mother’s house if things don’t get better,” she told IPS.

Domínguez said she spends her days trudging around offering her resumé, which no one is interested in.

She feels abandoned. “No one cares about the unemployed. Not even the unions care about us.”

The outlook is not good. The government says unemployment won’t start to go down until 2014 – a long time to wait for people like Martínez, Gómez or Domínguez, who number in the millions in this southern European country.

All rights reserved, IPS – Inter Press Service, 2012.

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