Why Isnt a Big Deal Made About 20% Unemployment in Spain?

Thargor

They seem to kind of "get away with it" if you know what I mean with regards to borrowing and bond yields as well as media speculation about whether they'll collapse every day, how do they manage? 13% unemployment is a disaster, I cant even picture 20% to be honest.

schween

Spain's banks are relatively stable, I imagine this is a large factor.

who what when

Because
1- They have a fairly low national debt. Just over 500 billion or so.
Thats just 5 times irelands debt with 10 - 12 times irelands population.

2- Spains budget deficit is about 10%. Irelands is about 15%.

3- Spain has a much bigger economy than ireland and therefore deemed to be able to handle this sort of economic problem better than a smaller economy.

To sum up Spain are in a bad place at the moment. We're just in a worse one!

Scofflaw

I'm not entirely certain they have got away with it as such. The Russians have excluded their sovereign wealth reserve from investing in Spain too. The markets tend to focus on one target at a time though.

cordially,
Scofflaw

Dannyboy83

We are in the sights at the moment, as Greece was before us.
If we go, then it's Spain/Portugal's turn.


The reason no fuss is made about Spain's 20% unemployment rate is because they have a famously large black economy.

My opinion only but as a percentage, real unemployment is probably higher in Ireland before you take into the account the massaging of figures through emigration/Fás and so on.

southsiderosie

Spain and Ireland aren't great comparisons.

At the peak of the boom, Spain's unemployment rate was 10.4%. So since 2006, their rate has doubled, while Ireland's has tripled.

In addition, Spanish commercial banks are in relatively good shape. Arguably, if a few of the weaker Irish banks were allowed to go under in 2008, you might see more Banco Santander branches across Ireland today.

Spain has a notoriously rigid labor market. For the last 30 years, as long as one person in the family has a job that is protected, everyone will generally be ok. When those workers start losing their jobs though, there will be massive problems.

Like Italy, Spain has a huge black market; befor ethe boom it was an estimated 1/3 of economic activity,

Finally, Spain is a big country, and there are dramatic regional differences. Southern Spain has always had high unemployment, but it also accounts for 20% of the population. Whereas the Basque Country is small, but relatively wealthy with a 9% unemployment rate. And because the country is so decentralized, the broader economic numbers may not mean that much if you are in, say, Bilbao versus somewhere in Castilla-La Mancha.

Cavehill Red

Spain's on the list.
Somewhere after Greece, Ireland and Portugal, but before Italy.
The markets are picking off the small and weak stragglers. When they test Spain, then the single currency itself will be under threat.

southsiderosie

I wonder too if some of this isn't related to how the two countries saw themselves during the economic boom.

Ireland was all about the Celtic Tiger model; hell, Bertie went all over the world extolling the Irish model to other small countries. For Ireland, its moment in the international sun was all about being rich - and at one point, richer than the British.

For Spain, the last 20 years have really been about it returning to Europe after a dreadful chapter in its modern history. Especially after the Socialists came back into power in 2004, the narrative was all about Spain being a forward-looking modern society.

Bringing it back to the present day, when the bubble burst, the Spanish narrative wasn't totally destroyed: they could still be a modern forward-looking country, but not everyone was going to be buying condominiums. Whereas in Ireland, when the bubble burst, the whole raison d'etre fell apart. So today, Ireland seems to be a far more depressed, angst-ridden place than Spain.

Maybe I am just reading too much into this, but I've spent the better part of the last two years moving back and forth between Spain and Ireland, so I've kind of seen the collapse from both vantage points, and despite what the figures say, it looks and feels a lot uglier on the ground in Dublin than it does in Madrid.

RichardAnd

Another thing to remember about spain is that the Black Economy over there is supposed to be considerably larger. Many of their unemployed are only technically unemployed.

jank

I agree that the 20% unemployment figure is not as bad as it seems. I had a friend who I lived with here in OZ for the last 8 months claiming unemployment benefit. Apparently you can do it on line! Real unemployment seems to be lower than 20%, while Ireland's unemployment is higher than the 13.6% official figure. The markets will focus on them after us and Portugal, they have time on their hands.

Scofflaw

southsiderosie wrote: »

I wonder too if some of this isn't related to how the two countries saw themselves during the economic boom.

Ireland was all about the Celtic Tiger model; hell, Bertie went all over the world extolling the Irish model to other small countries. For Ireland, its moment in the international sun was all about being rich - and at one point, richer than the British.

For Spain, the last 20 years have really been about it returning to Europe after a dreadful chapter in its modern history. Especially after the Socialists came back into power in 2004, the narrative was all about Spain being a forward-looking modern society.

Bringing it back to the present day, when the bubble burst, the Spanish narrative wasn't totally destroyed: they could still be a modern forward-looking country, but not everyone was going to be buying condominiums. Whereas in Ireland, when the bubble burst, the whole raison d'etre fell apart. So today, Ireland seems to be a far more depressed, angst-ridden place than Spain.

Maybe I am just reading too much into this, but I've spent the better part of the last two years moving back and forth between Spain and Ireland, so I've kind of seen the collapse from both vantage points, and despite what the figures say, it looks and feels a lot uglier on the ground in Dublin than it does in Madrid.

Good point - maybe we should have gone for a better national narrative than "in your face, losers!".

amused,
Scofflaw

Cavehill Red

It's not too late - perhaps we could start by putting Bertie under house arrest and stop him from giving his 'Create your own Celtic Tiger' lecture all over the Third World.

Amhran Nua

Cavehill Red wrote: »

It's not too late - perhaps we could start by putting Bertie under house arrest

He seems happy enough stuffed in a cupboard...

southsiderosie

Cavehill Red wrote: »

It's not too late - perhaps we could start by putting Bertie under house arrest and stop him from giving his 'Create your own Celtic Tiger' lecture all over the Third World.

Haha, I think he got the memo last year...

WalterMitty

Spain seems a weird country. Socialist leader on 90k a year while air traffic controllers there are making up to 500k while their equivalents in uk make 70k. But also some other public servants in spain like teachers are very badly paid.

alang184

southsiderosie wrote: »

...if a few of the weaker Irish banks were allowed to go under in 2008, you might see more Banco Santander branches across Ireland today.

So when the citizens voted for 'The Republican Party', this is what it actually means, rather than allow a big European bank with capital come in, take over existing banking infrastructure and then supply funding to businesses around the country.

I make reference to something that the now 'Mr. Incredible', Brian Lenihan, said not so long ago: something like wishing to "restore AIB back to its former glory".

About the initial topic. Spain has a much greater chance of recovery than Ireland. Spain does not have an enormous bank bailout, not to the extent of Ireland. Furthermore, a large factor in our bond yields is the uncertainly around our bank bailout. The sub-20 million loans of banks were not taken into NAMA, are resting on the bank's sheets, and have not been assessed yet. This is another huge problem coming down the tracks.

leeroybrown

As some posters have already pointed out Spain has always had high 'official' unemployment figures that doesn't necessarily accurately represent the number of people not earning. We on the other hand have had a significantly worse increase in unemployment in a context where the government have deliberately sought to maintain a low figure and are making even more of an effort to do so now.

While Spain's economy was definitely over-reliant on construction and tourism, it was to a lesser degree to our reliance on the property market. Due to the post-Franco era their banking regulation is tighter than ours, particularly in the area of deposit backing for loaned money, but they may still be exposed in foreign markets. The cost of living is far far lower there so the cost of paying for the unemployed is also lower. They're also a far far bigger country and much as we like to preach our own importance here, they ultimately carry far far more weight than we do.

southsiderosie

WalterMitty wrote: »

Spain seems a weird country. Socialist leader on 90k a year while air traffic controllers there are making up to 500k while their equivalents in uk make 70k. But also some other public servants in spain like teachers are very badly paid.

Are you talking about this article?

I have a few friends who are public school teachers, and while they don't make a fortune, they do well enough that they can travel during the long holidays and go out several nights a week. Plus some of them make extra money tutoring on the side (especially if they speak English). A single person can live pretty well in Madrid on 1200 a month. You can survive on half of that.

Gratzi22

What is needed is a centre/far right economic stance for the next five years, does anybody believe that Labour will do any thing postive for this country? Me thinks not

southsiderosie

Gratzi22 wrote: »

What is needed is a centre/far right economic stance for the next five years, does anybody believe that Labour will do any thing postive for this country? Me thinks not

What does that have to do with Spain?