Thursday, January 15, 2009

TENSION MOUNTS in Spain, as jobless numbers skyrocket. Not a pretty read. Worst part:
Over a million more workers are expected to be laid off in Spain by 2010, taking the total above four million, according to the Funcas savings bank consultancy. That would be far more than Germany, which has a population nearly twice as large.

Like other countries, particularly the United States, Britain and Ireland, Spain is struggling to wean itself off foreign financing and contain a property crash.

But unlike its European rivals, Spain has no strong financial or technology sectors to fall back on. It has no substitute for a construction-driven, labour-intensive economic model that created 8.5 million jobs in the last 13 years.

Prime Minister Jose Luis Rodriguez Zapatero has exhausted his emergency public spending power with an avalanche of over 70 billion euros in economic stimulus measures.

He has shied away from labour and education reforms: these could boost Spain's weak productivity, but might also ignite unrest like that seen late last year in Greece.
And that, my friends, is the key factor. There's no other economic sector that can pick things up fast. Even if the badly needed reforms in the labor market and education were made --a big if-- it would take several years, especially the latter.