Spain's unemployment rise  tempers green shoots of recovery

Since 2008, Europe has faced, the worst economic crisis in its history. Today, all the European countries know a difficult economic period and a few countries are more affected by this problem. It’s the case of Greece, Spain and Ireland. The rate of unemployment has increased this last few years to reach a record. With a huge debt, country like Spain must cut their spending and launch an austerity policy. The austerity describes policies used by governments to reduce budget deficits during negative economic conditions. As most of transactions are realized inside Europe and they are in austerity, the transactions between us are reduce. So the European economy is frozen, it’s a snowball effect. After Greece, Spain is the second country, which has been touched by crisis with tragic consequences.  First of all we are going to show the Spain’s economic situation, these causes and after we can see that recovery of growth is forecasting. 
I) Spain’s economic situation 
Since many years, there is no growth in Spain and unemployment increased.  A) Situation The Spanish economy has not contracted enough over the last five years like the German, French or Italian economies. So its jobless rate, unlike in these other countries has skyrocketed. There are fewer and fewer employment prospects because of the economic squeeze.  Spanish unemployment is a perpetual problem. However, before the financial crisis the economy was fueled by easy credit and a long construction boom. In 2007, it was just 8%. In the third quarter of 2014, Spanish jobless rate was 23.67% and the youth unemployment rate was at 53.80%. There is a record of 6 million Spanish workers without work. It described the fall in unemployment as ‘the biggest since 2008’. But, the unemployment rate now stands at 26%. It comes only second, after Greece, as the highest in the EU. It represents more than the double of the euro zone average (11.5%) and five times higher than Germany’s rate of 4.9%. In southern part of Spain, the situation is even worse, particularly in the provinces of Andalusia and Extremadura or the Balearic Islands. This phenomenon is more important in the South of Spain where 4 people on 10 have been unemployed.  Most Spanish have lost their job and lived in poverty.     

B) No security-job Another problem persists, Spain's labour laws make it difficult to fire employees, which scare companies from hiring workers when times are instable. As a result, Spain depends on temporary workers, rather than full-time or long-term employees, who don't count as officially employed.  So, the proportion of Spanish employed by short-term contracts is important. It is the highest in Europe and permanent roles with relative job insecurities are increasingly rare in Spain, especially for the young. It’s hard to find a job, around half of the near 6 million out of work in Spain have not held a job for more than a year, while the number of homes with no one in work stood at 1.8 million.  In 2012, exports climbed faster than in any other European country. In the same year, labor reforms make it easier to fire workers. The jobs market is more flexible and companies are ready to hire again. Moreover, with a rate of unemployment of 26%, there is a good and a cheap workforce available for the new companies which launch firms in Spain. This new labour-market flexibility is one reason why many companies (like the car makers) are moving production from other European countries to Spain.  
C) Jobless young people Things are worse for young people. Many of them feel that they have no future in their own country. In 2014, youth unemployment has remained extremely high with more than 53.80% of Spaniards aged from 15 to 24 years old are out of work. It represents almost 2 million people that cannot find a job. To give you an example, less than a half of those aged under 25 find a job.  In difficult times, young people are often the first to lose out. They are inexperienced and low-skilled, and in many countries they are easier to fire than their elders.  It makes them obvious targets for employers searching savings because though their low pay, they can redress things a little bit.  
II) Spain’s economic model and plans  
A) Economic model 
In Spain, the economy is mainly based and built around the services industry, tourism and construction.  1) Touristic country Indeed, this model created millions of jobs, mostly temporary ones, when the economy was booming and was destroyed when the housing bubble burst. Almost all of the jobs created were in the Balearic Islands and Andalusia—two regions that account for many of Spain's beach-and-sun summer visitors.  Seasonal factors such as tourism can have a significant impact on unemployment. 

2) Real estate market dependance  This dependence of Spain’s economy can be explained, in part, with the new law of the ground of 1998 votes by José Maria Aznar’s government. This original law (1975) distinguished among the not yet urbanized ground 3 categories: ‐ the not urbanizable area ‐ the urbanizable area ‐ the not programmed urbanizable area.  With this act, there is a liberalization of the land offer. The real estate market represented 10% of GDP before crisis. With such a dependence, many people worked, of course, in this sector. Everything was well for Spain, unemployment was low and households could buy a house or flat. We could think that the price of real estate would have decreased with the offer more important. But there was a speculative bubble which had increased the price of goods. In spite of the increase in prices, banks continue to lend money.
3) Foreign After a decade of above average economic growth, the prolonged recession prompted hundreds of thousands to leave the country in 2012, including immigrants returning home and Spanish in search of work elsewhere. Before the crisis, Spain received immigrants in search for a better life (600,000 just for 2006). Today, it’s the opposite Spaniard are leaving their country for the same reason.  

B) Plans to fight crisis 
    1) Monetary Policy   Unemployment and the housing crisis has provoked a banking crisis, the Spanish settlements are facing an increasing number of players. Government restrictions are important so it’s difficult for Spanish to live correctly. In Europe, it’s the European Central Bank which regular the quantity of currency in the market. If a country with an adverse economic situation want to boost their sales, it can’t devalue himself its currency. So Spain can’t do that. The main objective of the European Central Bank is to regulate the inflation and, in second time, favor the growth. So with the euro at the same level, it’s hard to attract foreigner investors.  It’s the biggest reproach made against the European Central Bank. Spain knew this problem like Greece. 

III) A way of recovery Spain has seeing signs of recovery but we will show the fragility of these predictions.  
A) Signs of recovery 1) Growth The country's GDP had grown at 0.4% in the first quarter of 2014, the highest rate in six years, according to the National Statistics Institute. In the second quarter it has accelerated to 0.6%,  and it expanded 0,50% in the third quarter of 2014. For 2015, the Spanish government predicted an economic growth of 1,8%. The IMF is feeling more optimistic about the Spain’s economy. Eurostate, the EU’s statistics agency, will publish its initial estimate of third quarter growth of eurozone GDP. Despite the GDP figures and growth predictions, unemployment rate remains above 24%.                      2) Employment Spain’s recovery boosts labor market. Data from the official labor market survey showed that 274,000 new jobs have been created on a year, 231,000 were in the tourism-heavy service sector.  Spain had created more than 190,000 jobs in 2014. It represents the first annual increase in six years.  Private sector employment continues to rise while public employment decreases. In the July to September quarter of 2014, there were 154,900 jobs created in the private sector and 3 900 lost in the public. In the meantime, the services sector added 108,800 new jobs, industry 71 800 and construction 43 500.  

In contrast, agriculture lost 73 100 jobs. By region, employment increased the most in Madrid (+ 57 800), Catalonia (+ 44 400) and Illes Balears (+ 30 900 persons).  Year-on-year, unemployment decreased by 515 700 persons and employment rose 1.59 percent. The active population decreased by 44 200 persons to 22.93 million persons mainly due to a fall in foreign labor force who return in their country.  3) European Central Bank’s action We have seen, few days ago that the European Central Bank is going to create currency, and the dependance of European countries bank’s on the ECB. It’s the first time that the ECB takes this decision. This action will result to decrease the interest rate, decrease the value of the euro and we can expect that the exportation will increase for the European country. But the importation will be cost more expensive.  
B) Figures prediction’s reality 
1) Limit of predictions In the last two years nearly two million of unemployed people have left their country, that's 10 % of unemployed people. Unemployment has fallen according to official survey from 27% to 24%, that's 3 points.  So, unemployment has not necessarily grown or dropped because it’s the active population which have fluctuated.      2) New growth model need to be sustainable Challenges continue. Because debt and unemployment are still too high, and a growth or 0,50 or 1% isn’t enough to maintain recovery. Moreover, taxes increased between 2011 and 2014, and continued to rise in 2014 to collect more money, social security contributions raised which affected in first the SME and selfemployed.  

Since the beginning of the crisis, Spain’s situation is very worrying. The rate of unemployment has reached a record (especially for the young people) and there wasn’t any growth. With an important debt, Spain had to reduce its budget and cut their spending. For that, Spanish’s government has slashed the wage of their employees. Bank has gone bankrupt (example of Bankia) and the other banks borrow less money because they are afraid. So, many companies have gone bankrupt too and people have lost their jobs. Without income, people can’t pay back their loans and live in poverty; there is a decrease of purchasing power.   In spite of tragic situation, we can see in 2014 signs of recovery with growth and declining unemployment rate.  However, some factors aren’t taken by account like the active population which decrease. So, it’s impossible to have a reliable data on the subject. 
To conclude, we can wonder if this recovery of growth will be durable in time or if it’s just a temporary moment.
 Spain's unemployment rise  tempers green shoots of recovery Reviewed by Dev17.club on samedi, janvier 28, 2017 Rating: 5 Since 2008, Europe has faced, the worst economic crisis in its history. Today, all the European countries know a difficult economic period a...

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