Posted by: Dirk | September 3, 2014

Spanish unemployment goes up again

Reporting unemployment numbers is always a bit of a game. Cyclical variations mean that you can either show that unemployment goes up or down, you just need to pick the right moment in the cycle. At this point in the cycle, many Spanish summer jobs are over. School restarts, and people don’t go to the beach anymore in September (though not this September, as Mediterranean temperatures rise above 30 still.) So, unemployment goes up, as El Pais reports (have look at part time contracts – parciales – to see the story). This comes hardly a week after German chancellor Merkel visited Spanish president Rajoy. Deutsche Welle reports:

Visiting Chancellor Merkel also lauded the gradual Spanish turnaround, saying it was the result of “very challenging and difficult reforms” embarked upon by Rajoy’s government. Merkel said that “the foundations are now laid” for a more sustained improvement of the Spanish economy.

The crisis in Spain continues, and given the contractionary fiscal policy stance in the whole of the euro zone it remains to be seen how and when growth will revive. If everybody spends less, the demand will continue to be weak. This problem has been with the euro zone since 2010, when worries about the ability to repay its debt started in Greece. Spain will not see its unemployment rate return to normal until something is done to the aggregate demand problem. The market was supposed to heal itself, but since the crisis in Spain started in 2007 that has already taken 7 years and it doesn’t look like things are improving.

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Responses

  1. A massive increase in competition from Asia has resulted in an increase in willingness to supply and a drop in price and profits for the Western nations.
    US workers and unions have adjusted much better than Europeans. It is the purely competitive adjustments from micro 101pplid to the world. It is not going to change anytime soon. In the US some conservatives hate government, want guns and do not vote their pocketbook. Wealthy Republicans rule. Unions In Europe, especially in government are not giving up without a fight. The rest will suffer! German wealth controls the show and I would guess they are making sure that when their actions cause a big fall, they and their money will end up in somewhere nice.


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