Spain's youth feel EU jobs pain

By Stanley Pignal in Brussels

As an employee of a publicly funded organization in Barcelona, Elena Pinto had hoped to avoid the worst of the economic downturn.

But as a 27-year-old living in Spain, she takes comfort knowing her redundancy last month from a training institute for civil servants has more to do with the economic downturn than anything she did.

“My employer’s budget was cut. What can you do?” she asks, having joined the 43.8 per cent of young people in Spain without a job. “The situation in Spain will get better eventually, of course, but the next few months don’t look good.”

With limited opportunities at home, her job hunting is extending to Germany and Belgium, where unemployment rates are less than half the 19.4 per cent reported on Friday for Spain.

From a jobs vantage, Spain has been the hardest hit country in the eurozone because of a well documented credit and construction bubble. But the unemployment data out on Friday showed that all of the 16 users of the euro – indeed, all 27 members of the European Union – have seen unemployment rise in the past year.

The 10 per cent unemployment rate in the eurozone means that nearly 16m people – approximately the population of the Netherlands – are looking for work throughout the bloc. The 4.5m extra unemployed since the start of 2008 exceeds the population of Ireland.

The two countries exemplify how divergent the eurozone’s economies and social models are. The Netherlands’ unemployment is the lowest in the EU, at 3.9 per cent. Ireland, by contrast, has nearly 13 per cent unemployed, about three times its pre-crisis levels.

The Europe-wide rise comes despite extraordinary political measures to stem unemployment, starting with euro interest rates at 1 per cent for much of last year, and market rates lower still.

Many countries, including the Netherlands, have also initiated “short-work” schemes, where governments have given subsidies to employers that kept redundant workers on their payroll throughout the downturn.

An estimated 2.4m workers throughout the EU benefited from such schemes in 2009, over half of them in Germany, where unemployment has stayed below 8 per cent throughout the downturn – and fell modestly in November.

The push from policymakers is to keep these types of policies going until the numbers start falling noticeably.

Herman Van Rompuy, the EU’s full-time president, told reporters in Madrid on Friday that a revitalized economy should be the starting point: “We can’t pay on a sound basis for our social model, or what I call the European way of life, with our low economic growth.” He said boosting economic growth and modernizing Europe’s economic performance was “a matter of survival”.

The crumb of positive news is that the number of jobs lost has been falling steadily in recent months.

Source: Financial Times.
Link: http://www.ft.com/cms/s/0/6a7b7892-fc82-11de-bc51-00144feab49a.html.