Behind the times

Astudy released by the Bank of Spain this week showed the extent to which young Spaniards have been affected by the economic crisis that struck in 2008 - a depression that in some respects is far from over, despite what the macroeconomics might tell you. Presented by the Bank's governor Pablo Hernández de Cos at Madrid's University College of Financial Studies, the report looked at purchasing power over a thirty-year period and found that young Spaniards, whether skilled or unskilled, are earning less than their peers did ten years ago. Today in Spain, thirty-year-olds earn almost the same as workers the same age earned twenty years ago. Revealing as it does two decades of lost purchasing power, this research shows that the country's macroeconomic performance - which has seen its GDP expand at one of the highest rates in the eurozone over the last five years - is only half of the story.

In a sobering reminder of how far Spain has yet to go to recover, the Bank's research also revealed that the average Spaniard is 15% less wealthy than they would have been had the crisis not hit. But it wasn't all doom and gloom: as well as diagnosing the problems in the country's labour market - long-term unemployment, temporary contracts and poor vocational training chief among them - the Bank also presented solutions to be pursued by the next Spanish government. Financial incentives such as bonuses and wage hikes were among these, but they shouldn't negatively affect companies' willingness or ability to recruit new employees, said Hernández de Cos.

This is the kind of solution favoured by acting prime minister Pedro Sánchez, who introduced a minimum wage hike of 22% in January, from €736 to €900. It was a laudable move, but won't be enough by itself. Labour market reforms introduced by Mariano Rajoy's conservative government, supposedly to smooth the path to economic recovery, made it easier for companies to fire workers - which is exactly what the Bank fears many will do as a result of Sánchez's initiative. In recently released research, it has predicted that as many as 125,000 jobs will be lost because of the minimum wage increase.

In his presentation, Hernández de Cos also noted that temporary youth employment is at a problematic rate of 70%, whereas the eurozone average is 52.6%. A key task of the next government, then, will be undoing the labour reforms introduced by Rajoy, thereby increasing the job security and incomes of young Spaniards. Helping the long-term unemployed back into work and improving education and vocational training are also crucial. But while these formidable tasks are being tackled, don't be fooled by Spain's stellar GDP statistics: the country has some way to go before it can properly say that it's left the crisis behind.