29 Mar 2012

Spain’s ‘indignado’ youth now angry at attempts to help them


In Puerta del Sol Square, the birthplace of the “indignados” (the inspiration for the Occupy movement), Europe’s youth are stirring again. As I write a large crowd of young people are systematically shutting down the square’s shops chanting “Don’t shop while we can’t work”. This is the build-up to a massive march on Madrid and all of Spain’s major cities as part of an all-encompassing general strike.

This is the most severe test for Spain’s new conservative government. And Spain more generally is also the eurozone’s biggest worry. That’s because Berlin-Brussels sado-austerity is about to be tried on Europe’s 4th biggest economy, an economy that already has a majority of its young people without work.

Spain simply has to grow in order to get its young people back to work. Not just for them, but also to make a dent in the astonishing unemployment benefits bill that is 4 per cent of GDP, or €40bn. Yet at this moment the Partido Popular Government is putting its finishing touches to a brutally austere budget, to be presented tomorrow. This, in fact, will crush growth this year, and possibly next year too. Spain is already back in recession, 2012 will see an overall GDP contraction of minus 2 to three per cent. This year will be the worst economic year since democracy returned, one leading economist argues that it will be the toughest since world war two.

It is impossible to overstate the desperation of youth here. They are the best educated Spanish generation ever and for the most part, jobless. I met Alex, Diana and Ana, all twenty-somethings with no prospects. Two had never worked despite 200 job applications.

“My experience is I have never had a job, I’ve always had temporary jobs. That’s for eight years,” said Diana, who is trained in human resources. One had lost her job. All lived with their parents and expected to do so until their 40s. When they did go for jobs at MacDonald’s, they said they were told they were overqualified. They see these problems lasting until the 2020s. “We have to leave Spain, to go to England or Germany,” said psychologist Ana. The teacher, Alex, said that he would go to Brazil.

The new conservative government in Spain wants to improve the lot of the jobless youth by making it easier and cheaper to fire highly protected older workers. Spain’s “two-tier” labour market has until now made it rather easy for young workers to be the buffer labour force that is summarily fired, because they can be, while older workers stay in their jobs. The new government’s reforms should help them, in theory, by dragging down rights for existing older workers. I put that to the young workers and the union chief who called today’s general strike. They didn’t buy it.

What seems inescapable in the short term, is that these reforms, this year, will increase unemployment and youth unemployment.

And yet this is far from the only problem facing Spain. A housing and banking crisis that might need funds from Brussels remains in the background, submerging many poorer families in debt. And on top of that, with unemployment already so high, tomorrow we we’ll get possibly the biggest austerity plan of any large economy. Does austerity even work when half your young people are already put of work? Spain is something of an economic laboratory right now. The experiment gets critical tomorrow.

More on Spain’s cuts, and its sub-prime crisis, tomorrow.

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