Thursday, April 25, 2013

VERY BAD JOB NUMBERS from the survey for the first quarter in Spain:
More than six million Spaniards were out of work in the first quarter of this year, raising the jobless rate in the euro zone's fourth biggest economy to 27.2 percent, the highest since records began in the 1970s.

The huge sums poured into the global financial system by major central banks have eased bond market pressure on Spain, but the cuts Madrid has made in spending to regain investors' confidence have left it deep in recession.

Unemployment - 6.2 million in the first quarter - has been rising for seven quarters and the latest numbers will fuel a growing debate on whether to ease off on the budget austerity which has dominated Europe's response to the debt crisis.
Not to deny the extreme seriousness of the problem, but it's important to state that this isn't a new phenomenon, it's only a little more exacerbated because the general situation is worse. But unemployment in Spain has consistently been higher that in similar countries, and that's basically because of the rigidity of the labor market. Most labor laws still stem from the paternalistic system instated by Franco, who bought social peace by making jobs extremely stable by decree. Amazingly, it's been more than three decades since he's gone but no government has changed that, not even the supposedly pro-market cabinets led by Aznar or Rajoy. You'll see a big dip in the early 2000s, but that's basically because it was the bubble era. Even then, with 9-10% unemployment, that was about twice other countries. It just "didn't matter" because the economic activity was frantic back then.

But it you take a look at this chart showing unemployment since 1976 until today, you'll see what I mean (click to enlarge)