Spanish Unemployment and the Hidden Economy

Spanish EU UnempThe level of unemployment in Spain has reached worringly high levels with over 25% of the labour force out of work. More of a concern is the 57% of the labour force under 25 without a job. However with these levels, especially amongst the youth, one would think that social unrest, crime rates etc would be widespread in the country. There is a belief that the hidden economy (working in cash jobs and also claiming benefit) hides the real figure and, like in Ireland, the labour force is contracting as those without job prospects stay on in education or emigrate.

However in Spain the education system doesn’t do any favours for those students that fail exams when they are 16 – if you fail you are out the school system. This is all very well if there are jobs/trades available for those without qualifications. In 1984 the late Margaret Thatcher said “Young people ought not to be idle. It is very bad for them”. Those that start their careers on the dole are more likely to have lower wages and more spells of joblessness later in life, because they lose out on the chance to acquire skills and self confidence later in their formative years. It is estimated that there are over 310m young people (16-25) that are looking for work. One of the main issues to be addressed is the mismatch between education and the labour market or commonly referred to as structural unemployment.

To reduce the level of unemployment in Spain the economy’s net job growth needs GDP of 1% or more but the Spanish government doesn’t forsee that until 2016.

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