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Tuesday, 21 January 2014

Unemployment and economic misery in Spain: there are perhaps greenshoots, but the country has still a long, long way to go.

So it would seem we've still got a long long way to go, I know
I've heard all I wanna hear today

Yesterday, I wrote an article, named “The two faces of Italy”, about the Italian employment and unemployment and in particular, the regional differences between it.

After seeing the large, regional differences in Italy between particularly the southern part of the country and the rest of it, I became curious about another renowned problem area in the Euro-zone: Spain.

This country owns the dubious record of currently having the highest unemployment in whole Europe: even higher than Greece. 

The other dubious record is that almost six in ten youngsters are unemployed in Spain: a disgraceful average.

Tonight, as if it was meant to be, I watched an episode of Topgear on television that was probably recorded somewhere in the second half of 2012: in this episode the boys went to Spain with three ‘budget’ supercars.

While being on this journey, Clarkson, May and Hammond went through a number of Spanish ghost towns and deserted commercial areas: built, finished and totally ready for new inhabitants… who never came to these places after all. Although the episode was filled with the typical Topgear humour and bad jokes (albeit to a lesser degree than normally), the images of crisis-struck Spain made an enormous impression on me. 

Reading about a crisis with truly massive unemployment and despair is another thing than seeing it in real life…

A few weeks ago, I reported on this blog that Spain finally seemed to have found the way up and I am extremely pleased about that. Nevertheless, I know that the country has a long, long way to go on the path towards renewed prosperity.

This afternoon, before I had even read about Topgear in Spain, I had been wondering whether there were also such large regional differences within the unemployment in Spain, as there were in Italy.

In Italy, the southern part has been much more crisis-struck – in terms of soaring unemployment and loss of employment – than the Northern parts of the country. Would this also be the case in Spain?!

Well, the answer is ‘yes’ and ‘no’!

When it comes to unemployment among adults, there are clear regional differences. You can see this in the following charts, in which I show the three regions with the least and the three regions with the highest unemployment, with capital Madrid as ‘median’ value. All data is courtesy of the Instituto Nacional de Estadística from Spain:

Three regions with the lowest unemployment vs Madrid
Chart made by: Ernst's Economy for You
Data courtesy of:
Click to enlarge
The reason that the Balears (Ibiza, Menorca and Mallorca) have such enormous swings in unemployment, is that it is ‘all hands on deck’ on the islands during the summer months: the tourist industry simply needs almost all hands that it can get, causing a serious drop in unemployment during these months. During the winter months, however, the situation becomes precarious on the islands and unemployment rises by almost ten percent during this period.

In contrary to other touristic regions in Spain, it seems that the Balears kept their head up against particularly the Turkish all-in hotels.

The main reason for this is probably the world-famous nightlife and the unrestrained culture on the islands, which still attract loads of youngsters from Germany, Great Britain and The Netherlands.

Basque country in Spain is traditionally the Spanish region with the highest GDP, fueled by manufacturing industries, like the metal industry, the chemical industry and (shortly) the biotech industry. Also the services industry is very important in Basque Country. This favorable situation leads to the lowest unemployment in Spain.

Navarra, famous for its successful wine industry, is also the centre of the renewable energy in Europe, according to Wikipedia: the regions has several hundreds of windmills and about hundred hydraulic (i.e. water-powered) turbines.

Three regions with the highest unemployment vs Madrid
Chart made by: Ernst's Economy for You
Data courtesy of:
Click to enlarge
It is probably hardly a coincidence that two of the three regions with the highest unemployment, are also the regions with the hottest and dryest climate in Spain. Both regions have to deal with the ‘desertification’ of the landscape and temperatures that can rise up to 40 degrees centigrade in summer.

The Extremadura (i.e. ‘extremely tough’) region is the smallest economic region of Spain, as this part has only one million inhabitants. The region is aiming at developing an industry for renewable energy (particularly solar energy), but currently it still has to deal with massive unemployment.

Andalucia, also an extremely hot and dry region, with the famous Costa del Sol in the South, was traditionally an agricultural region, in which the soaring tourism also became very important. 

The region, however, had to deal with the upcoming touristic industry in Turkey – where Turkey’s massive hotels with all-inclusive formula became an instant sucess– and lost this battle until now.

The renewable energy industry and the agricultural and biotech industry although they brought massive growth in the years before the crisis  are yet not strong enough to save the economy of Andalucia from the loss of tourism.

And although the Canary Islands are increasingly important for the European Space Technology industry, due to their bright skies and favorable climate, their main driver is still the tourist industry. Also these islands have probably lost the battle with the Turkish all-in hotels; this probably caused the soaring unemployment on the islands.

Where the aforementioned charts with the adult unemployment in Spain are already alarming, nothing can prepare you for the mindboggling Spanish youth unemployment.

Mind you, the following chart contains the regions with the lowest (!) youth unemployment:

Three regions with the lowest youth unemployment vs Madrid
Chart made by: Ernst's Economy for You
Data courtesy of:
Click to enlarge

On this chart the Balears Islands are the region with the lowest youth unemployment: ‘only’ 33% during the summer months.

Basque country and Cantabria, the other two regions with the lowest youth unemployment still have respectively 42% and 47% of youth unemployment: already an outrageous number. Madrid – the governmental heart of Spain  has over 50% of youth unemployment.

And the following chart is probably one of the worst unemployment charts that you will ever see in your entire life:

Three regions with the highest youth unemployment vs Madrid
Chart made by: Ernst's Economy for You
Data courtesy of:
Click to enlarge
The three regions with the highest youth unemployment are the same regions that have the highest adult unemployment: Andalucia, Extremadura and the Canary Islands.

All three regions have a youth unemployment of over 61%: this is an utter disgrace for Spain and the European Union. 

That is the reason that I call the European leaders one more time to do something about this ‘scar of shame’: the Spanish youth unemployment! In the past I already called for a Marshall Plan for Southern Europe (in particular Spain, Greece and Portugal). 

Today, I do that once more!

Unfortunately, the European Union has until now followed the path of austerity and more austerity; this mindless path brought three of the PIIGS countries to their knees. 

This should change now! It is time that the governments of Spain, Greece and Portugal make decisive steps toward a succesful economic reconstruction of their economies. And the EU should help them with that, instead of hammering on austerity and fiscal prudence. There is no time for that now! 

If necessary, this economic reconstruction should perhaps happen at gunpoint from a European Commission, which should also undergo a paradigm shift: from mindless austerity towards rebuilding the economy! 

This must happen, before it is too late and a lost generation has emerged in Spain!


  1. Thank you for this enlightening insight. These unemployment rates don't look good.
    Just for my information (taking the longevity topic into consideration): What age is 'youth' defined as? 16-18? 16-25? 16-35?
    Regards, Patrick

  2. Thanks for your comments and your question, Patrick. In these statistics, youth is between 16 and 25 years old!