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Carlos Rubio

SPAIN: Economic Renaissance Over

by Carlos Rubio

4 March 2009

At one of the busiest unemployment offices in central Madrid, people have been standing in line since six in the morning.

It is a cold and rainy winter morning in the Spanish capital, and there are more than 200 people queueing, many of them hiding their faces under umbrellas, hoods and hats.

A quick glance at the line shows a diverse mix of ages, gender and ethnic backgrounds.

Isabel Ramón is in queue waiting to fill in the forms required to collect her monthly benefits after she and 20 others were fired by the advertising agency where she worked.

"With my previous salary, I won’t be getting more than 600 dollars a month, and only for a maximum of 10 months," she says.

In depth

Isabel is in her early 30s, and like many Spaniards in her age bracket, she still lives at home with her parents.

For many people, the dream of buying a flat in Madrid, or even renting one, has now become more elusive than ever.

"I knew this was coming, and started looking around for work in other advertising agencies months before I lost my job, but all I saw were more and more people being sacked, and no one hiring," Isabel said.

In Spain, financial support from families often fills the gap left by the welfare state, which is not as developed and generous as in other European nations.

Isabel says that without help from her parents she would not have been able to survive.

Prosperity lost

In recent years, Spain’s rapidly-expanding economy created nearly one-third of all new jobs in the eurozone and became the envy of the European Union.

High growth rates fuelled by consumption and a booming construction sector were bringing the country closer and closer to the standard of living of other Western European nations.

However, as the global credit crunch began to set in last year, the country’s fiesta came to an abrupt end.

After months of rising redundancies, Spain now has the highest unemployment rate in the eurozone and the country is in the middle of its worst recession in 50 years.

Statistics indicate that 200,000 people lost their jobs in January, raising the country’s unemployment rate to 14.4 per cent and bringing the total number unemployed to 3.3 million people.

One Spanish daily newspaper recently wrote that "never before had a developed country suffered such a profound and swift destruction of the labour market as the one seen in Spain."

The unemployment rate is more than double that of other major European economies, and the fear among many Spaniards is that the figure could reach four million by the end of the year.


Luis Toharia, an economist at the Universidad de Alcalá de Henares, near Madrid, says the overwhelming importance of construction activity in the Spanish economy, helps explain the speed at which unemployment has risen in Spain.

Toharia says Spain’s employment rate surged in the last decade largely due to the construction industry’s rapid creation of job opportunities.

But the construction sector is also losing jobs faster than other industries.

Alejandro Gómez, a construction worker from the Dominican Republic, once prospered under the construction boom, but now finds himself unemployed.

He has not been able to sleep for weeks and wonders how long he will be able to last before "ending up in the street doing things."

His wife and three children are with him in Madrid, and until the middle of last year he was wiring money to another two children he had in Santo Domingo, the capital of the Dominican Republic.

He has been told he can only claim another six months of unemployment benefits, which total less than half the wages he earned last year.

He says his mortgage wipes out all of his 600 dollars in benefits.

The regional government of Madrid has put him on four different construction skills courses so far, but none of them have helped him get a job.

"What hope can one have living like this?" he remarked to Al Jazeera.

Toharia believes Spain’s recovery depends on global markets: "Our situation here depends very much on the outside, once the global economies and Europe start moving in a positive growth direction, they will pull Spain out of recession."

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