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Spain The Unemployment Problem
Spain's most nagging and seemingly intractable economic
problem has been the persistence of high unemployment. The
industry shakeout of the 1975-85 period, declining job
opportunities in agriculture, and the virtual drying up of
the
need for Spanish workers in Western Europe led to an
unemployment
rate that, throughout the 1980s, rarely went below 20
percent,
the highest rate in Europe. Overall employment between
1976 and
1985 declined by almost 25 percent. The sharp slowdown in
labor
demand, following the first oil shock, coincided with the
growing
exodus from rural areas. The decline in industrial
employment was
due not only to production cutbacks in a number of key
sectors,
but also to prior widespread overmanning and to the
abruptly
urgent need to address deteriorating economic conditions
by
stressing higher productivity and lower unit labor costs.
The
ensuing slowdown in real wage growth did not moderate
before
1980. As a result, real wages surpassed productivity
between 1976
and 1979 by 22 percent.
Though government programs, such as the strengthened
Employment Promotion Programs, led to the hiring of more
than 1
million people in 1987--more than double the average of
about
450,000 per year between 1979 and 1984--they did not
appreciably
alter the level of joblessness. With almost 3 million
people
unemployed in 1988, the official unemployment level of
20.5
percent was almost double the OECD average. Record numbers
of new
job openings were created in the buoyant economy of 1987,
and
total employment increased by 3 percent, but the new jobs
barely
kept pace with the growth of the labor force. Undoubtedly,
the
unemployment rate would have been much higher were it not
for the
relatively low level of participation of women in the
labor
force. The unemployment rate for women in the labor force
was
about one-third higher than that for men.
Youth unemployment was particularly high. The under-25
agegroup accounted for nearly 55 percent of all unemployment,
a
factor that contributed to juvenile delinquency and street
crime.
Thus the increasing participation of young people and
women in
the work force contributed to a persistence of high
unemployment
in the booming economy of the late 1980s because of the
relatively low rates of employment among both groups.
Another
reason was that, although the economy was growing, part of
the
expansion was due to improved equipment, and not to
increased
employment. Industrial production, for example, rose by
4.7
percent in 1987, but industrial employment grew only by
2.5
percent. Nonetheless, these official unemployment rates
were
believed to be too high, for they did not take account of
those
persons believed to be working in the underground economy.
Data as of December 1988
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