Going into the recent European leaders' summit in Brussels, the conservative prime minister Mariano Rajoy was in the unusual position of enjoying the wholehearted backing of the Socialist opposition as he lobbied for swift action by the EU to stimulate the youth jobs market.
It was an extremely rare instance of unity between Spain’s main two political parties, usually at odds over everything from abortion to austerity. But it was also a sign of how desperate a problem the lack of jobs for young people has become here.
The overall jobless rate is just over 27 per cent, but with 56.4 per cent of under-25s out of work, youth unemployment is perhaps the most damning legacy of the country’s ongoing economic crisis.
Workforce duality
"The Spanish market consistently has a high unemployment rate," says an official at the CEOE employers' association, pointing to a labour environment that has historically undermined the prospects of younger workers. "We have a strong duality, with young people having nearly no protection at all and the core workers in the market over-protected."
Workers on permanent contracts in Spain have traditionally received good salaries, bonuses, up to six weeks’ holiday and the knowledge that they are – and expensive – to fire. Those on temporary contracts, who are often young, don’t enjoy the perks and are much cheaper to lay off.
On taking power 18 months ago, Rajoy said unemployment would be his priority. Yet to the neutral observer he has placed far greater emphasis on slashing the public deficit through austerity as he has sought to meet EU economic targets and ward off a full sovereign bailout.
But there have been initiatives to counter the employment problem. In November of 2012, the government introduced a new dual training contract which borrowed from the German model. It was aimed at encouraging firms to hire young workers while also guaranteeing them a minimum of training. But, eight months on, the scheme has failed to take hold, with businesses complaining that further norms are needed to ensure it benefits both employees and companies.
Labour shake-up
A sweeping labour reform introduced in the first quarter of 2012 did at least partially address the issue of the market's wildly contrasting contracts, for example by cutting the cost to firms of firing those on permanent contracts. However, the situation of those on temporary contracts has not improved.
“The labour reform has given us more unemployment and more precarious jobs,” said Tania Pérez, head of the youth wing of the Comisiones Obreras labour union, which led a general strike against the legislation last year.
She says measures within the law designed to incentivise hiring, such as a first year’s employment on a probationary basis for new young staff, are abused by many companies, which often let those workers go once the 12-month test period has passed. They then hire someone else under the same, precarious conditions.
But although unemployment has risen steadily since the introduction of the reform, some experts believe its benefits will become apparent.
"Empirical studies show that a reform such as this starts out by destroying new jobs for a year to a year-and-a-half," says Gayle Allard, an economist at IE Business School in Madrid. "Then it starts to kick in as companies lose their fear of hiring: when they realise that they're not buying a piece of machinery they can't get rid of but that actually they're hiring a valuable resource."
In May, the number of jobless fell by 98,000 and, yesterday, the government announced that in June it fell by a further 127,000. These rare pieces of good news have prompted the government to start talking tentatively about economic turnaround.
Critics, such as the unions, say the May and June figures are merely a seasonal blip. But regardless of whether a recovery is imminent, there is a feeling that Spain’s dysfunctional labour market has already taken its toll on a generation.
Earlier this year, recruitment consultant Adecco estimated that 390,000 people had left Spain to find work abroad between the beginning of the crisis, in 2008, and the end of 2012. Most of them were under 40, and Germany, Britain and France were the most popular destinations.
Enrolment on language courses has spiked, as young people prepare for a career outside Spain.
This phenomenon echoes the 1960s, when hundreds of thousands of Spaniards fled to northern Europe to escape the isolated economy of the Franco dictatorship. But there is a difference.
Modern migrant
"The typical profile of Spanish emigrants now is completely different to that of 50 years ago," says Carmen González, a senior analyst at the Elcano Royal Institute in Madrid. "In the 1960s, they had a basic education and were from rural backgrounds, but now they are university-educated."
Dr González says the number of Spanish university graduates has soared in recent years, contributing to a white-collar job shortfall. A surplus of highly educated young Spaniards has left many fighting for the same job and driven wages down.
Psychologist Adriana Gimeno (31) is looking further afield than most young Spaniards as she considers her future. After searching for months, she recently found work in the human resources department of a large firm.
However, given the pay and lack of stability the post offers, she is considering moving to Brazil. “In Brazil they’re paying good wages,” she says. “There I could earn three times what I’m earning here.”
