Six million reasons for another policy

The staggering unemployment figures in Spain are the clearest indication yet of the depth of the euro crisis and its consequences. At the same time, it dramatically confirms that the measures being pushed through, in Brussels and here in Spain, with all the sacrifices they demand, are not bearing fruit. On the contrary, things are getting steadily worse for us. The survey of the active population (EPA) published yesterday threw up the worst data ever: for the first time more than six million Spaniards are without a job. Of them, nearly two million have been without work for more than two years, which means that they have, at most, only the 400 euros of the minimum income allowance. The picture is a bleak one.

Till now, the directives the European Union has been issuing in its fight against the crisis have referred to large public finance ratios, a party line that aims to avoid distorting the financial balances to allow the markets to do their business without interference. Beyond that, there’s very little else. The President of the European Central Bank (ECB) has just claimed that the bank is taking vigorous action against failure to respect deficit targets, but has not said a word about what should be the objective of the economy and economic policy: the well-being of citizens, the first and key manifestation of which is employment – especially when the dearth of it becomes chronic, which is what is happening in Spain, where the lack of a job is beginning to be synonymous with social exclusion. Among the major international institutions, only the IMF, through its Managing Director, has alluded to the dramatic level of unemployment in Spain to suggest changes, if not to the measures themselves, then at least to the pace at which they are being applied.

Spain is being driven into a corner

The government’s reaction to yesterday’s numbers, which makes the absence of a coherent discourse abundantly clear, was to highlight how job losses in the first quarter of last year compared with the figures for this year, without taking into account that this year Easter fell in March. Emphasising that fewer jobs were lost between January and March of 2013 than in the same period in 2012, it has offered a discreet defence of the labour reform it launched last year. But the data are stubborn: even though the cost of labour has been reduced, the economy is still hemorrhaging jobs. The EPA reveals that, as feared, the erosion of temporary employment has been followed by an erosion of fixed contracts, which has been facilitated by the new law. The official line, which no longer says that when recovery does come the reform will trigger job creation, but limits itself to expressions of faith that there is light at the end of the tunnel, suggests that the new legislation has not yielded the intended results.

The EPA from the first quarter is the main argument that the government should put forward to justify a change in economic policy. The prolongation of the crisis is adding millions of people to the ranks of the chronically unemployed, who may not be able to re-enter the labour market on their own. Faced with this prospect, any structural reform of the economy or changes to the pension system will be for nothing. The country will not be able to take it. A man as orthodox and prudent as Andreu Mas-Colell, the Minister of Economy of the Generalitat in Catalonia, called yesterday for a "turning point" in European policy. From his point of view, the European Union has an excessive obsession with austerity, which is not backed up by results: European GDP is falling, unemployment is rising, and in Spain is being driven into a corner from which it will be very difficult to escape.

In the light the experience of recent years, we can expect Brussels to stick to its official doctrine, although deadlines for fulfilling the deficit targets are being extended, and only implement real change if the problems of unemployment and poverty in the south of the EU affect the economies of the north. Some signs already suggest that they are. However, when this happens, in all likelihood it will be too late for us.

European Union

Un(der)employment underestimated

According to statistics published by Eurostat, 26.3 million Europeans were unemployed at the end of February, 19 million thereof in the euro area, which corresponds to jobless rates of 10.9% and 12% respectively.

But according to Le Soir, this figure “significantly underestimates the scale of underemployment”. The level of underemployment is calculated by Eurostat’s Labour Force Survey, whose Annual Results for 2012 have just been released. If to the unemployed one adds “discouraged workers”, “the potential supplementary labour force” (people who’d like to work but aren’t immediately available) and “involuntary part-timers”, notes the Belgian daily

45.4 million Europeans are actually suffering from the job shortage, i.e. 19% of the workforce. Nearly double the official jobless rate. So we can guess why the ‘underemployment’ rate is not published.