Euro zone crisis puts Spain at risk of lost generation

The pain in Spain continues to reign as the jobless rate among the under-25s breaches 50 per cent and an economy on the euro zone's critical list faces a bruising road to health.

Spaniards angered by increasingly grim economic prospects and unemployment, hitting one out of every four citizens, protested in droves in the nation's largest cities. Above, Barcelona. AP Photo

Statistics notoriously lie or distort - but not always.

Despite their ability to mislead, they can also "be made to prove anything, even the truth", as a quote of unidentified origin states.

And no one is raising much doubt about the veracity of the most recent numerical findings on how Spain is, or is not, weathering economic crisis.

According to a report described by commentators in Madrid as the most exhaustive to appear on the subject, Spain's national statistical institute (INE) says 24.4 per cent of the adult population available for work is unemployed. Worse, the proportion rockets to 52 per cent among those under 25.

Nowhere is the economic pain of Spain better reflected than in that second figure and its gloomy meaning, namely that every other young Spaniard out of school or college has no job.

Spain, so often romanticised for its sunshine holidays, cheerful inhabitants and colourful heritage, is in deep trouble.

It is not quite the sickest of Europe's intensive-care patients. Greece's malaise is undeniably deeper. Neighbouring Portugal, Italy to the east and Ireland to the north are hardly in the rudest of health.

But the dramatic levels of joblessness - the percentages translate as nearly 6 million people out of work, an unprecedented number - give a measure of the task confronting Mariano Rajoy, the conservative leader who became prime minister last December after his right-wing People's Party defeated the socialist government in elections.

"These figures are very worrying," says Jorge Crespo González, a professor of political science and public administration at the Complutense University in Madrid. "There is a lost generation and it risks being lost for ever if things do not swiftly change. And that looks a tall order right now."

Increasingly, the Spanish and in particular the young, whether well qualified or with modest educational achievements and employment experience, are looking abroad.

"Among my students, especially those following international studies, there has always been this possibility of going to work abroad in embassies, for example, or for international organisations,'' Prof Crespo says. "But recently we have seen much greater attraction to this route."

Even people who have just lost their jobs as the crisis hits harder consider moving abroad in search of work.

For linguistic reasons, Latin America and US cities with large Hispanic communities, such as Miami, have long been attractive destinations for those able to move but Prof Crespo cites Britain and Europe's strong man, Germany, as the most common choices.

They migrate reluctantly. "The Spanish are generally closely attached to their home ground and families and do not change location easily,'' he says. "This crisis, though, has produced a spirit of flight and led to thousands leaving."

Anecdotal evidence supports his analysis. Jon Henley, a correspondent from the UK's Guardian newspaper, travelled through beleaguered euro-zone countries and found widespread restlessness.

In Seville, Darriba, 30, with diplomas in international trade and industrial safety he cannot use, told him that apart from brief employment in a car plant and dockyard, he had worked only as a waiter.

"Even then they cheat you,'' he said. "They declare only half or a third of the hours you work so they don't have to pay full social security. It means if you're out of work you can't claim benefits because you haven't paid enough in."

Ninety kilometres away in Huelva, Dani Martin, 20, a trainee chef, had struggled to stay employed as the recession drove down takings in the cafe where he worked. Eventually the owner stopped paying him. "I've worked abroad before," he said, "and I'll have to leave Huelva, probably Spain, to find a proper job."

If people in service industries have often adopted nomadic ways, those with marketable skills - engineers, doctors, nurses - are also on the move. Academics also fear a brain drain among research specialists - hundreds are said to have fled Spain - will dash hopes of a shift towards knowledge-rich sectors.

The credit ratings agency Standard & Poor's has not been impressed by Spain's handling of the storm. It clipped two notches off the country's assessment, downgrading it from A to BBB, on fears about its ability to reduce deficits at a time when banks are significantly weakened.

Santiago Nino Becerra, a professor of economics at the Ramon Llull University in Barcelona, told a Madrid writer for the French daily Le Figaro some banks would be forced to seek European help. An economics specialist at the newspaper, Alexandrine Bouilhet, quantified the problem. "At this stage the needs for recapitalisation of the Spanish banking sector are calculated at €50 billion (Dh237.6 billion); a sum higher than the state's total outlay on public expenditure in 2011 and equivalent to half the public deficit," she said.

But it is the human price of failure that has brought people on to the streets of Madrid in their thousands - they were out again at the weekend, the first anniversary of the start of the anti-austerity "indignants" movement, known in other crisis-hit western countries as the "occupy" demonstrators - to protest about its impact on their livelihoods and job prospects.

"Unemployment has always been high in Spain," says "Jake" (not his real name), a Briton living with his wife and baby daughter in the north-western city of Leon.

"My wife has two university degrees and has never been able to find a meaningful job in Spain. The only decent jobs she's had have been in England. And almost nobody in the private sector has a long-term contract.

"Most people work with one year, six months or even three months rolling contracts, so how they plan for the future, get mortgages is beyond me. And not all in the private sector have proper contracts. My sister-in-law is a qualified nurse and she has to put up with the uncertainty of short contracts."

Jake's politics are left-wing and he is among those critics of Mr Rajoy's government who consider its approach perilously close to that taken by Europe's increasingly influential far-right parties.

"How millions of working-class people can vote that charmless man into office is beyond me," he says. "His right-wing supporters in the PP [People's Party] are direct descendants of General Franco's Falangists [a reference to the fascist dictator who ruled Spain for four decades until 1973]. He's making them suffer now though."

Less partisan observers suggest that while Mr Rajoy's support spans the spectrum of right-wing opinion, power rests in the centre, leaving radicals in a small minority.

"But it's true that one might think the Rajoy government is now using the crisis as an excuse to impose on the Spanish a socio-economic model that is strictly neo-liberal or even extreme right,'' Prof Crespo says.

One problem is that measures to curb the deficit and master debt have so far had what he calls a "deplorable'' and counter-productive effect: "Middle-class people, who would be consumers given the right conditions, are not.

"We see perplexity, confusion and dissatisfaction among a remarkable section of Spanish society. Almost all the news that it hears from government is negative, suggesting new efforts.

"And to that we must add almost two million families in which every member capable of work is unemployed, with a real risk they will be attracted to the black economy ... ordinary people, the real losers, are puzzled by a crisis they did not cause but for which they are paying a very high price, while banks and politicians that were key players in creating and managing the crisis have not even had the decency to apologise," Prof Crespo says.

And what is the prognosis? The nuances in the replies are significant but from both the government and some economists, the outlook is one of short-term gloom tempered by longer-term confidence.

The finance minister, Luis de Guindos, said recently that while the Spanish economy was enduring one of its toughest spells, a way out of recession would be found next year with growth restored in 2014.

He stuck to his guns last Friday when European Commission predictions raised severe doubts about all these aims, warning that Spain - alone among euro-zone nations - would remain in recession next year, with the deficit still running at an annual 6.3 per cent, twice the limit set by the EU.

Prof Crespo sees a long slog ahead.

"My country will emerge from recession stronger, but not in the short term," he says. "To achieve this, the government must choose a realistic economic model, based on the true capabilities of the country [such as tourism], and a real support for a knowledge-based economy. The outlook in the short and medium term is not good, quite the opposite.

"In the long run I trust in Spain's potential to create wealth and recover."

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