Between 1997 and 2007 the Spanish labour market was ahead of the field in terms of job creation (more than 3.5 million). Now, since 2007, Spain has been ahead once again, this time in job destruction. The crisis has weakened the effects of any labour reform or attempt to prevent the country from reaching the more than six million unemployed mark.
With the highest unemployment rate both in the EU and among the developed countries that form the OECD (24.4% with 5.6 million unemployed) and with all forecasts pointing to the figure breaking the six million barrier, experts maintain that any legislative measure to curb the problem will be useless until there is economic growth of more than two per cent of the gross domestic product (GDP).
Santiago Ruesga, Professor in Applied Economics at the Universidad Autónoma in Madrid, justifies Spain’s leadership at both extremes by the highly cyclical nature of the economy and the fact that most jobs generated so rapidly are for non-qualified labour and are therefore the first to disappear in a crisis.
On the other hand a crisis is a good time to sort out situations that do not function well. The Spanish labour market has always had several weak points that have led to more unemployment. More than five thorough labour reforms have failed to improve the situation, as the current economic cycle has shown.
Rafael Domenech, Professor in Economics at Valencia University agrees that Spain's problem stems from a specialisation in activities of low productivity and high availability of unqualified labour, combined with low interest rates, which have led to such a great employment variation. He also stresses the important role played by scarce investment in active policies, inadequate labour laws, badly designed passive policies and collective negotiations.
The crisis has caused the destruction of more than 3.5 million jobs, the same number as were created during the previous period of economic growth. Workers came from all over the world in search of employment opportunity and have now been forced to leave.
Now the tables have turned and unemployed Spaniards are resorting to emigration to find work abroad. The latest forecasts published by the OECD, the EU and the Spanish Government itself, maintain that the unemployment rate will continue to rise in 2013 to more than 25 per cent. In other words one in four workers will be unable to work.
Some experts, such as AFI consultancy partner, José Antonio Herce, consider that it is "about time" that the Spanish authorities explain how they are going to reform the employment systems of the state and the regional authorities, and how they are going to organise private recruitment agencies and active employment policy to find a way out for so many unemployed. So far the latest move the Government has made has been to cut unemployment benefit, following in the footsteps of Germany, France or the UK.
The OECD singles out Spain as the developed economy with the highest unemployment rate, stressing youth unemployment which is currently at 51.3 per cent. Despite a general institutional approval (FMI, OECD, EU...) of last February's labour reform, its ineffectiveness has made some call for further reforms aimed at creating a single job contract.
The experts, as well as business associations, claim that it is the dual existence of temporary and indefinite contracts that has thwarted the country's efforts to steer its job market out of the crisis, as this has limited its scope for modification. Since the end of 2007 the first to lose their jobs have been workers on temporary contracts; in total two million of them, according to a recent study by Bank of Spain experts, Mario Izquierdo and Aitor Lacuesta. The report reveals that 80 per cent of workers who lost their jobs were on temporary contracts.
So, what is the solution? For more than 1.8 million Spaniards this has taken the form of looking for work elsewhere. According to the National Institute of Statistics (INE) as well as the International Mobility report by Adecco, these figures show that the number of people seeking work abroad has doubled. The majority of emigrants are young people who, unlike in the case of previous exoduses from Spain, are highly qualified and hope to be able to return to this country in two or three years if the economy picks up.
Now however the young emigrants are being joined by older long-term unemployed who are resorting to looking elsewhere due to the lack of opportunity here. Argentina, Venezuela and Germany have become the most popular destinations for Spaniards escaping the crisis.
Rather than a mere search for a better future elsewhere, for many emigrating is a matter of escaping poverty. According to the a report drawn up by the association of temporary employment agencies (AGETT), the Misery Index in Spain at the start of 2012 had increased by 15.5 points, affecting 26.4 per cent of the population.