On the horns of a dilemma for Spain’s joblessMonday 25 February 2013 11.43 By David Murphy
By David Murphy, Business Editor in Madrid
The Spanish crash has parallels with Ireland’s economic collapse. Banks in both countries funded a misguided building boom, the lenders were bailed out and the construction sector imploded. Now unemployment is a huge problem and the deficit is being addressed with unpopular austerity measures in both countries.
But for those who find themselves out of work there some significant differences between the two states. Ireland’s social welfare system affords significantly better protection to those who become unemployed than Spain’s does.
Over the past few days I interviewed a number of people who are unemployed in Spain. Surprisingly, some people received nothing at all from the state, while others received nothing when their social security contributions ran out.
Ernesto Torrico (31) is a presentable, articulate graduate. On paper, he is eminently employable, with two degrees: one in international commerce and the other in marketing, But Ernesto has been looking for full time work for two and a half years. He lives in a modest one-bedroom apartment in Madrid city centre with his girlfriend who has a job. Ernesto receives no support from the state. His only income is €75 a week from coaching under 12s soccer (one of the boys is the son of Real Madrid boss Jose Mourinho). Like many young unemployed people, Ernesto receives financial support from his parents. Without it he couldn’t survive.
Carlos Gomez (43) is a man who has been living under continual stress for months. He is an unemployed truck driver from a village outside Madrid called Torres de la Alameda. He lives with his wife and seven-year-old daughter in a small house. The family receives a total of €105 in state benefits every week. The Gomez family is €13,000 in arrears on mortgage payments and it is due to be evicted by Banco Popular on April 15th. This is another notable difference between Ireland and Spain: already Spanish banks have repossessed 200,000 homes during the crisis whereas Irish banks have evicted relatively few families.
The country’s crisis is at an earlier stage than Ireland’s collapse and property prices may fall by another 15- 20%. Already they are down 35%, partly because some banks own estate agents which kept prices artificially high.
While the Spanish economy is expected to show modest growth this year, people searching for work will continue to look in vain. Growth in employment usually lags an expansion in output so experts predict Spain’s unemployment level could reach 27% this year.
The light at the end of the tunnel will continue to look dim for many.