Spain’s rhetoric on the European Economic Crises has been unmovable. Only after Greece, it had one of the highest unemployment rates in the EU, soaring to 26.3% in 2013. Almost 5 years later, we have managed to push it down to 17.8%, where 10,5 million work contracts were signed in the first six months of 2017 in Spain.
While this seems remarkable, there is a bleaker reality behind the numbers. Firstly, the unemployment rate is well above those from most other EU countries. Secondly, the low unemployment rate succumbs to precarious and unstable jobs, especially amongst the young population.
The Spanish Labour Market
Despite the decrease of unemployment and an increase in employability, coming closer to a pre-crises scenario, this optimism has not transferred to the quality of jobs. The elements that define the quality of a job are its contractual duration, unremunerated extra hours and the abuse of shielding a job as an internship. Read more on our EU internship article here.
The Young Deadlock
The EU Commission estimates there are 180,000 internships in Spain. While little data exists on internships in Spain, it is not a secret that there is a widespread of abuse of fraudulent internships, which are used to cover the needs of the company through a thin veil of lax regulation. This results in a barrier for young adults in Spain seeking to enter the labour market, where work conditions are precarious. The quality of the job will influence in the labour market and productivity of the worker, creating a bigger ripple in the Spanish economy.
With almost 20,000 interns in Spain, the nature of internships has shifted from a formative experience to becoming a stop-gap measure for employers seeking to take advantage of free labour. They have become the replacement of cheaper workers for cheaper salary, and in some cases with interns doing the dirty laundry that employees had been putting off for months. What’s more, the National Insitute of Statistics (INE) estimates that on average the Spanish intern does 3,5 hours of unpaid overtime. This wouldn’t be so drastic if the intern was engaged, or receiving formation during the internship: but that is not the case. Cheap employment is masqueraded under the promise of an internship, or even a future employment, where they are undervalued, underpaid and lack formative elements.
La Caixa Research reminds us that this situation has only been magnified, as it is similar to the pre-crisis era, leading us to conclude that there is a structural problem. Jobs in Spain have been dubbed as precarious, not only by the national institutions, but also by international organisations such as the OECD. The abuse of internships delays the inclusion of the young population in the job market, and has forced a considerable amount of the young population to find employment elsewhere in Europe (Germany and the UK have proved to be popular destinations for young employment-seekers).
In 2013, youth unemployment soared a 55%. The latest figures published by Eurostat reveal that youth unemployment in Spain is 40.5%. The older you are, the harder it becomes. Out of that number, 17% of 20-24 year olds are “ninis” (Ni estudio Ni trabajo; not studying or working) and 19% of 25-29 year old are “ninis” (for a recent graduate to find a job, they have a better chance of winning the Lottery of el Gordo).
Length of employment
The National Bank of Spain has denounced that 54% of the jobs created since 2013 have a nature of being temporary, which has allowed the unemployment rate to decrease under false pretence. More jobs do not necessarily mean more productivity. They explain that the “significant job creation has occurred in a context of wage moderation”, and so “in the economy as a whole, remuneration per employee recorded a zero rate of change in 2016”, while “in the private sector branches saw a decrease in wages of 0.2%, similar rate of the last two years”.
Out of the 10.5 million contracts signed this first half of 2017, only 5,42% of them gave the applicant a durable contact, that is, an indefinite or full-time contract. 26% of these had a duration of less than one week. Temp jobs have become the norm, and in Spain they account for 26,1% of current jobs, the second highest in the EU, only behind Poland at 27,5% (Eurostat). This is 10 points less than the EU average of 14,2 % temporary contracts. Just for the sake of comparison, the UK has 6%, Belgium 9%, Germany 13,2% and France 16.1%. It is the young Spaniard that is filling this temp job bubble, with 73% being 29 or younger (SEPE pg 55). When joining the job market in Spain, 23% of recent Spanish graduates are engaged in part-time employment (INE).
The CCOO (one of the most prominent unions in Spain) reveals one last alarming figure. Last September, more than half of the Spanish population were in a situation of labour ambiguity, with 52% having an unstable labour contract either part-time or temporary, while only 48% had some kind of fixed contract. Experts may identify sources that lay spread across the Spanish political spectre. Yet this article is not defending the policies that each wish to undertake, but press on the issue that in Spain, regardless of the political ideology, all agree that there is a problem, and that it needs solving.
Quality of the Jobs
The situation in the Spanish labour market has become so abusive, that La Caixa Research feels the need to differentiate between contracts that offered the employer benefits, despite its temporality, and contracts which they dubbed “precarious”. In their report, they measure the quality of employment in Spain. Using a OCDE Paper, their methodology concentrates in measuring income, job stability and work environment. Spain is among the worst OECD countries, and the report concludes that young adults in Spain receive half in wages of what the older population does, due to the precarious conditions. The work environment in Spain forces the young worker to not only lower their standards, but also to be grateful that they are now an abused intern that will be over-worked, under-valued and under-payed (if he is lucky to land a payed contract!).
While unemployment is reducing, the salary offered to new young workers is 17% below the average wage, and fixed term employment has become a rarity. The lack of job opportunities has resulted in job competition increasing by 157% since the start of the crisis, especially in areas such as business administration and human resources, with a ratio of 200 applicants for 1 job.
A survey carried out by ESADE and InfoJobs showed the crude reality of how much the Spanish population aged 25-30 is ready to take, with 3 out 4 declaring they were willing to undertake a free internship in order to gain “professional experience”. It is important to highlight that Spain has a record level of dependency, aged 29, in Europe.
Who is to blame?
It is no wonder that Spaniards have looked elsewhere for employment. The number of Spaniards living abroad increased 63,5% during the crisis, reaching 2,4 million on the first day of 2017. Spaniards have sought better employment conditions in their European neighbours, with Germany, UK and Switzerland proving to be popular destinations. The departure of the young and vibrant has sparked anguish amid warnings that Spain will suffer the dire consequence of this brain drain. While they may only represent a small percentage of the population, it is quality that is at stake here.
While José Ignacio Wert, former Minister of Education, and Alfonso Dastis, Minister of Foreign Affairs, advise that the departure of the bright minds is not due to the current labour conditions, it is nonetheless a controversial assertion. They rationalise that emigrating “enriches” the mind and capacities of the young population, providing them with tools and “new horizons”. They are blinded and fail to see how the precarious job situation in the Spanish labour market has led sections of the population to find opportunities elsewhere. Moreover, they fail to understand how this holds a negative impact over the Spanish economy. Spanish analysts agree and warn that the departure of such a crucial part of the population will swerve the economy out of the track, stopping it on its feet. With many workers, consumers and taxpayers leaving the country, there will be less that can pay back the country´s public debt. This will also bring a darker tone to the demographics of the country, and with lower birth rates and one of the highest ageing societies of the EU, it will be a challenge to sustain the already crumbling pension system at hand.
Job quality influences in the inclusion of young adults in the labour market, as well as their productivity, acting as a pull mechanism for the macroeconomics of the country. It is important to reform the laws protecting interns and workers, and even more important is to hold them inside of Spain. We need the young population back greasing the gears of an economy that has been blasted thanks to the mounting of mal praxis carried out by companies, the Spanish mentality and the continuous change in the education system. “What positive effects can there be when the best prepared generation of our history is condemned to emigrate to earn a living? It is simply the result of a great failure,” concludes Javier Pueyo, Vicepresident of the Consejo de Juventud Española, in an interview with the Huffington Post.