Spain is Doomed; Youth Unemployment Hits 51%

[jimmy olsen]

How long can such a situation last without some sort of radical revolution or are Spaniards to apathetic and depressed even for that?

http://www.telegraph.co.uk/news/worldnews/europe/spain/9044897/Spains-lost-generation-youth-unemployment-surges-above-50-per-cent.html

Spain's lost generation: youth unemployment surges above 50 per cent
More than half of young Spaniards are out of work, according to fresh statistics, signalling a lost generation that has been hit hardest by Spain's economic woes, as the total number of unemployed surged above five million.

The number of 16-24 year old Spaniards out of work rose to 51.4 per cent in December, more than double the European Union average, according to a report by Spain's National Statistics Institute. The national unemployment rate hit 22.85 per cent, the highest rate in nearly 17 years and the current highest in the industrialised world.

Spain's young have been dubbed 'generacion cero' or 'the ni-nis' – neither in work nor full time education- and for many their only hope of seeking a better future is moving abroad, sparking fears of a brain drain.

"This is the least hopeful and best educated generation in Spain," said Ignacio Escolar, author of the country's most popular political blog and former editor of the newspaper Publico. "And it's like a national defeat that they have to travel abroad to find work."

When the crisis began in 2008, Spain's under-25 unemployment rate was below 18 per cent but it has nearly tripled within four years as Spain's housing boom collapsed and it sank into recession.

Young Spaniards are now living in the family home longer than ever before, pushing the average age of independence from their parents to well into their thirties.

"These people are delaying their advance into adulthood. It's a very scary time for young people," said Sara Elder an economist with the International Labour Organisation (ILO) which published a report into youth unemployment around the world.

"They find the path that worked for their parents is not working for them."

The ILO report, published last October, warned that the consequences of mass youth unemployment could be dire.

"Increased crime rates in some countries, increased drug use, moving back home with the parents, depression – all of these are common consequences for a generation of youth that, at best, has become disheartened about the future, and, at worst, has become angry and violent," it said.

Spain already has one of the highest rates of cannabis and cocaine usage among its young in western Europe.

The botellon, the social activity for younger people of drinking alcohol in public areas such as the streets, has also increased in popularity leading to police clampdowns.

Young Spaniards led the protests throughout last summer, setting up camps in plazas across Spain in the movement that became known as "Los Indignados" – the Indignant ones.

They complain that even a university degree leaves no guarantee of finding work.

"When you go to university, you develop very high expectations, and then you leave and get a reality check," says Tomás Muñoz, a 25-year old graduate of Alicante University and a spokesman for the Juventud Sin Futuro (Youth without a future) platform.

Analysts warn that youth joblessness could have a devastating effect on a nation that needs a dynamic young workforce to help economic recovery and lead Spain out of recession.

"It's a problem not just for them, but for all of us," believes economics professor Gayle Allard from the Instituto de Empresa in Madrid.

"This is the generation that will be paying for the welfare state and pensions in the future. If they can't get started with relatively secure, well-paying jobs, start to put away some savings, start to accumulate assets, start paying into the welfare system, where does that leave the rest of us?"

[MadImmortalMan]

"This is the generation that will be paying for the welfare state and pensions in the future. If they can't get started with relatively secure, well-paying jobs, start to put away some savings, start to accumulate assets, start paying into the welfare system, where does that leave the rest of us?"

Way to focus on what's important, Mr. Gayle Allard. That, of course, being how are you going to exploit these kids for your nest egg if they have no money.

[Josquius]

That's not including those in full time education?
Wow...
Most Spanish people I know are doing a phd or some other form of staying in uni whilst they look for a job. They say this is pretty common and it certainly makes sense to me, better to be doing something and keeping yourself busy than just lounging around. If these people are excluded from the stats.....

Way to focus on what's important, Mr. Gayle Allard. That, of course, being how are you going to exploit these kids for your nest egg if they have no money.

Myeh, its an alright argument; lets old people, even those whose own kids are fine, see they have a vested interest in the situation being resolved.

[Phillip V]

I am going to start stocking up on firearms and non-perishable food.

[Martinus]

"This is the generation that will be paying for the welfare state and pensions in the future. If they can't get started with relatively secure, well-paying jobs, start to put away some savings, start to accumulate assets, start paying into the welfare system, where does that leave the rest of us?"

Way to focus on what's important, Mr. Gayle Allard. That, of course, being how are you going to exploit these kids for your nest egg if they have no money.

I saw a political cartoon recently which depicted a bunch of kids sitting in a circle inside a sandbox and one of them saying "I heard they had us so we can pay for their pensions."

[Sheilbh]

Way to focus on what's important, Mr. Gayle Allard. That, of course, being how are you going to exploit these kids for your nest egg if they have no money.

I think it is important.  The welfare state's a triumph of the twentieth century but it isn't sustainable with large-scale unemployment for a very long time.  If this goes on we could have a generation not in work enough to pay for pensions and a generation ageing without sufficient private pension provision, but coming cuts to the state pension.

I think it's especially difficult in countries like Spain, Italy and Greece (from what I understand anyway) where the welfare state is incredibly tilted towards retirees as opposed to the unemployed or other 'younger' benefits.

[Josquius]

No vote for over 70s!

[Tamas]

Way to focus on what's important, Mr. Gayle Allard. That, of course, being how are you going to exploit these kids for your nest egg if they have no money.

I think it is important.  The welfare state's a triumph of the twentieth century but it isn't sustainable with large-scale unemployment for a very long time.  If this goes on we could have a generation not in work enough to pay for pensions and a generation ageing without sufficient private pension provision, but coming cuts to the state pension.

I think it's especially difficult in countries like Spain, Italy and Greece (from what I understand anyway) where the welfare state is incredibly tilted towards retirees as opposed to the unemployed or other 'younger' benefits.

How can it be a triumph if it is on the high road to hell after a few decades?

[Richard Hakluyt]

Full adulthood is reached in the early 30s followed by retirement in the early 50s 

The root of the problem is that many welfare states were set up during a demographically benign period. Ageing populations and increased life expectancy are making the more generous systems unsustainable.

Spain's unemployment was pretty bad before the depression started IIRC; there are structural reforms that would help even if the depression continues.

[Lettow77]

 Choose your own adventure, bailout edition:
    http://crookedtimber.org/2012/02/16/so-what-would-your-plan-for-greece-be/

[fhdz]

I am going to start stocking up on firearms and non-perishable food.

I am going to start stocking up on waterlegs and highly perishable food.

[Sheilbh]

The root of the problem is that many welfare states were set up during a demographically benign period. Ageing populations and increased life expectancy are making the more generous systems unsustainable.

I think there's a cultural element too.  Greece, Spain and Portugal all developed their modern welfare state relatively late - after the dictatorships - and Italy's is from what I understand distinctive.  They all spend far less on it than Northern European countries.  As a % of spending and of GDP both Portugal and Spain have a smaller welfare state than Britain, Italy and Greece are below the EU average and way below the Northern Europeans.  Within the EU Mediterranean countries, on average, spend less on welfare than the Anglo-Saxon, Continental or Scandinavian welfare systems.

But it's an area that needs a lot of reform really.  From what I understand they all emphasise payments to the elderly while having very weak, or low provision for younger people - such as unemployment, housing, childcare, family benefits.  Over 50% of their welfare bill goes in pensions, while in the other systems that's somewhere between 33-40%.  The cultural element is that I think this is perhaps because it's more normal for families to provide support in these societies.  So the generosity to the elderly was in lieu of generosity to young people, but they'd be more likely to stay at home, help with the family and so on. Though I could be wrong on that.

But it does mean that the system is more exposed to the problems of an ageing population - especially in Italy and Greece with lower birth and lower immigration rates.  I think the EU studied the various welfare models in Europe and found the Mediterranean one least equitable and least encouraging of efficiency, which is a shame and surprising given that it was designed later than the other major systems.

Spain's unemployment was pretty bad before the depression started IIRC; there are structural reforms that would help even if the depression continues.

I agree.  But I think the pay off has to be that the EZ doesn't go mad about their deficits in the short-term.  This was a point Martin Wolf made in his column this week:
http://m.irishtimes.com/newspaper/finance/2012/0307/1224312912841.html?via=rel?via=rel

[Tamas]

I think the EU studied the various welfare models in Europe and found the Mediterranean one least equitable and least encouraging of efficiency, which is a shame and surprising given that it was designed later than the other major systems.

I think there's a cultural element too.

cue (sorry Tim, que) in angry Spaniards in 3... 2... 1...

[The Larch]

"This is the generation that will be paying for the welfare state and pensions in the future. If they can't get started with relatively secure, well-paying jobs, start to put away some savings, start to accumulate assets, start paying into the welfare system, where does that leave the rest of us?"

Way to focus on what's important, Mr. Gayle Allard. That, of course, being how are you going to exploit these kids for your nest egg if they have no money.

It's also painfully obvious that that person doesn't really know the Spanish situation at all, as I don't think that young people over here had secure and well paying jobs anytime in the last 20-30 years. 

[The Larch]

I think the EU studied the various welfare models in Europe and found the Mediterranean one least equitable and least encouraging of efficiency, which is a shame and surprising given that it was designed later than the other major systems.

I think there's a cultural element too.

cue (sorry Tim, que) in angry Spaniards in 3... 2... 1...

Why should we? It's obvious that there are cultural elements in the way that policies are designed and implemented in different countries, and it's true that in Spain and other countries the policies regarding welfare are biased towards one sector of the population.