The International Writers Magazine: From our Spanish Correspondent
The Scurge of Unemployment in Spain
Greece has officially been declared a basket case, the gurus at the Davros Economic Summit continue to predict what we all already know, the Arab League has given up on Syria whilst Russia waits in the wings to pick up the pieces and Iran threatens to put up the price of oil.
Europe, particularly the Euro zone continues its downward slide as if they’re competing in the Winter Olympic skiing slalom and the poor old cruise ship industry has been knocked off its perch thanks to the tragic wreck of the ‘Costa Concordia’. However, here in Spain not only are we beginning to see a radical change with the new government’s policies, all the filth and rot caused by the previous socialist lot – and I’m trying to be impartial and objective – continues to come to the surface in bucketfuls.
So let’s begin with a recap of where Spain stands at the moment.
I have said all along, the country’s deep rooted woes are primarily political and constitutional. In practical terms this means too many political parties, especially the nationalists (Basques, Catalans and Galician) trying to control the Spanish Parliament and top heavy government institutions created by the 1978 Constitution after the death of Franco and the end of his dictatorship. This translates into the setting up of seventeen autonomous – and I mean autonomous – regions, dozens of provincial deputations and over eight thousand town councils every one of them with their own set laws, budgets, education and health services; a very difficult jigsaw puzzle to unravel and change without going for an all out public referendum. But then you’ve heard all this before in my previous dissertations!
Next is the present unemployment rate. In the last quarter of 2011 the figure has jumped to over 5 million with over 45% of youngsters between the ages of 25 and 35 year olds out of a job. It continues to grow. To give an example, the Spanair airline, sponsored by the Catalan government has suddenly shut down at the end of January leaving 2500 employees out on the pavement! They just haven’t enough passengers to fill the planes. Every international financial and economic forum has now given Spain a strong warning to resolve this long standing and creeping evil that the previous government failed to do anything about. It boils down to a badly needed reform of the labour laws. Spain’s employment system is too rigid, out of date and heavily dependant on the Marxist trade union ‘veto’ on any type of negotiation. Result? Small businesses and companies, which constitute 60% approximately of Spain’s economic contribution, are dying by the dozen due to lack of funding and expensive hiring and firing laws. Add higher than average absenteeism, a top heavy public service and over educated university graduates (1.5 million without hope of a job) and the situation is catastrophic. More than one generation has been lost. Many of the young brains are leaving the country for better pastures!
The third problem that does not help the employment situation is the never ending restructuring of the Spanish banking system that was at one stage praised by the previous Prime Minister, Rodriguez Zapatero as being the best in the world. For two years I have been predicting a collapse in this area thanks to a large proportion of money in control of the century old Savings Banks that are now having to trim down and turn into proper banks. Their hidden toxic assets and over generous social benefits – once a leading money supply for local community shindigs - are still being brought out of the closet as they merge and merge and merge; laying off more workers by the day.
What is the effect of the above? Quite simply that the economy is not only at a standstill but threatening, as pointed out by the IMF and the OECD to recede towards a similar situation as in Greece. Negative growth means more unemployment, less tax and less contributions to the Social Security that ends in greater deficit. No need to explain as most of you dear readers understand the simple mathematical equation of country economics.
But there is light at the end of the tunnel with the measures been taken by the new conservative government of Mariano Rajoy and hopefully the acceptance of their implementation to counteract the disaster. As mentioned in earlier essays he has been cool since he took over. He has met with most important world leaders, has set his sights firmly at the heart of Europe, has worked with his cabinet ministers and finally presented a drastic overall plan that includes tax increases and heavy cuts in public spending. He’s also given the trade unions and employer associations a sort of ‘ultimatum’ to get their act together. Everyone will be affected by the increase in basic income and council tax although VAT has been kept on the back burner. Another measure is to ‘cap’ all autonomous regions in their public borrowing. This means that if they over spend their budgets they will be penalised. As most of the country is now in the control of the conservatives the rest of the political parties have very little clout in counteraction other than moan. In other words, the PP, People’s Party has an overwhelming majority mandate in the whole country. The trouble is that in following months there will probably be a continued drop in the economy and rise in unemployment as the changes will take time to have any ‘real’ effect.
Will Spain survive thanks to the medicine or does it still need major surgery? It may depend on the following:
The Socialist Party restructuring is a fundamental key to the recovery. This means modernising, accepting that a welfare state can only function with sound economic policies and that money doesn’t grow on trees. Supporting some of the conservative government’s policies is vital. However, they don’t seem inclined to follow that direction. Here’s why. They are at the moment in the midst of an internal election campaign to see who will run as head of the opposition for the next four years. ‘Freddie’ Rubalcaba, the ex-Minister of the Interior and Carmen Chacon, the previous Defence Minister are battling it out in a ‘Round Robin’ around the country drumming up votes from the supporters. So far their soap box speeches mention restructure but deep down they are still riding on the same bandwagon of ‘lambasting’ the PP on the new measures and act as if during their previous term of office they never did anything wrong. It reminds me of one of Bill Cosby’s acts describing the capers of his young daughter who blamed it all on the cat. If the Spanish left wing refuses to accept the mess they’ve left this country in and don’t come to some sensible program with new XXI Century ideas, I’ve predicted for the last couple of years that Spain will continue on the wrong road to recovery. Their input is essential provided it is positive.
Another important area to watch is that of the trade unions, especially the splinter groups in the autonomous regions. They should not create continuous mayhem with strike action after strike action. So far they have been quasi-mild; nevertheless trouble may start in some of the more depressed areas as belt tightening takes effect and the masses are rallied to take to the streets. Greece and Egypt are typical examples of what could happen here.
Corruption is an added negative. It is a deep rooted virus hurting the nation. Fraud and misuse of public funds over the past years has even affected the Spanish Monarchy as one of the King’s son-in-laws Iñaki Urdangarin married to Princess Cristina is up before the magistrates for massive embezzlement of public money. There is another even worse case taking place in Andalucía. Millions of Euros have been diverted all over the place in non-productive public companies, unemployment fund scams and a plethora of hand outs to fictitious associations and the like. These are just two examples and are the tip of the iceberg. Although the tax authorities are clamping down on evasion, a heavy increase in moonlighting is another area affecting the economy although some pundits say that those working in the shadows are keeping many families from begging on the streets.
Then we have ETA, the Basque country terrorist group. Despite all the fanfare, international press and general hoopla by the Socialist Party - whilst in power - on the finally declared and supposedly permanent ceasefire of terrorist activities by the group, the government of Mariano Rajoy has stood firm and said, ‘No!’ to any further talks or negotiations until they accept repentance and deliver all their hidden arsenal. No different to the Peace Agreement in Northern Ireland. Those with criminal activity will continue to be prosecuted. Meanwhile, as I stated earlier, the group has already won a political battle by representation in the Spanish Parliament and are certainly making their voice heard. They are demanding that present prisoners without blood on their hands be given an amnesty and that all others should be relocated to the Basque Country nearer their family and loved ones. The answer is still ‘No’. Curiously, in far away France more ETA members are being arrested and found with guns, explosives, false ID’s and car number plates indicating that they are far from turning into a pacific and law abiding lot.
Now for a bit of soap-opera front page news.
The famous – or infamous – Spanish judge Baltasar Garzon (remember the guy who chased after Chilean Dictator Pinochet?) is in the dock charged with three offences of abusing his legal powers as a member of the judiciary. The first is for ordering ‘illegal’ phone tapping of conversations between lawyer and customer in one of the country’s most notorious corruption court case that implicated of all people the President of the Valencia region (where all the European expats live). The second is for ‘illegal’ application of Spain’s Law of Historical Memory that was meant to uncover all the muck caused by the right wing during the Spanish Civil War and Franco era. The third is for ‘accepting’ funds from various conferences he held back in the USA. I mention this not because of the accusations themselves but because all the Spanish left including Ms. Chacon of the Socialist Party, Ms. Bardem (Oscar winning film star Javier Bardem’s mother) and the Spanish film mob are backing and publicly demonstrating their support in his favour. Judge Garzon may be innocent; that’s not the point. The point is that the very system of who should be prosecuted and how appears to depend on the public popularity of the defendant, in this case a glamorous and left wing Spanish judge who has stuck his foot in it and is suffering from some of his own medicine.
Finally, the new government has started to rattle swords regarding Gibraltar. Once again the old sovereignty bit has been raised and the British Foreign Secretary has officially been asked by his counterpart in Spain. As usual, the PM has told the Spaniards to get lost. Hopefully it won’t cause street demonstrations and the like as those that have been taking place in Buenos Aires thanks to the Argentine Mrs. Kichner claiming back the Falklands/Malvinas. Don’t forget the Falklands’ War 30th anniversary is approaching on the 2nd April.
That folks is the overall scenario of future attractions; for the time being. My personal conclusion is that the present Spanish government is on the right path ‘finally’ recognising that the country has a serious problem and Spain, together with the rest of Europe will have to pull its socks up. But to place my hand over my heart and offer a prediction my simple answer is, ‘it’s too early’ Give it another six months and we’ll see if there is any improvement or if the situation has become too hot to handle and we’re once again facing a social upheaval similar to 1936. If that happens lets hope it’s without any bloodshed!’
© James Skinner. February 2012.
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