Rising Job Losses Choke Spanish Recovery

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When 28 positions in Granada's city hall came up, more than 2,000 people applied. Then when nearby Armilla advertised five new jobs in the local police force, there were 250 applicants.

Some industries are thinking laterally. Faced by a drop of 8.7 per cent in foreign tourism in 2009, Spanish tourism, for example, wants to stop relying on its traditional holiday packages. "We need something more sustainable, like gastronomy, rather than selling Andalusia as the land of bullfighting and flamenco," says Maria Jose Senorans, who runs a rural hotel in Cariatiz, Almeria.

"We've already had a big drop in guest numbers" – three million fewer tourists throughout Andalusia in 2009 – "and these are very difficult times".

That's no exaggeration. In 2009 51,000 jobs were lost in Spanish tourism and nearly 1,000 travel agencies closed. As Exceltur, the trade's main association recently put it, "It was a year to forget."

Unfortunately for Spain, 2010 may be, too. Only last week, the IMF predicted that it would be the only G20 nation to remain in recession this year, with economic output at -0.6 per cent.

What the markets now ask about Spain's credibility has ominous similarities to their concerns about Greece: how can Spain simultaneously reduce a public deficit which has risen to 11.4 per cent of the GDP and invest enough to get out of the crisis?

Spanish President Jose Luis Zapatero certainly talked the talk in Davos, promising to cut Spain's deficit to 3 per cent of GDP by 2013 in line with EU stability targets.

Just 24 hours later, Zapatero revealed how: a package of austerity measures, including a hike in retirement age to 67, and a reduction in government spending by €50,000m over four years.

Some plans to refill the Spanish treasury's depleted coffers are already in the pipeline. VAT will go up to 18 per cent, and a €400 rebate for taxpayers, one of Zapatero's central promises when re-elected in 2008, has been ditched. As for the unemployment problem, three-way talks between government, trade unions and businesses will soon discuss making labour markets more flexible and incentives to contract younger workers.

Any hopeful signs? A very few: in autumn 2009, both the number of new companies and the number of new mortgages were up – for the first time in three years.

The Ibex rose by 30 per cent in 2009, too, its second best year of the past decade. And no Spanish bank has actually gone bust.

However, with about one in three of all recent European job losses in Spain, unemployment remains the blackest spot on the country's copybook. The IMF prediction of 0.9 per cent growth in 2011 is hardly encouraging, either.

One unexpected development is a reflourishing of rural life, such as in Granada's agricultural green belt, known as La Vega. Local residents say that in 2008 about three of every 10 allotments were cultivated: that number has now tripled.

Not that agriculture per se can fulfil its traditional role as a refuge for Spain's unemployed. In 2009, agriculture's jobless total rose by 29.3 per cent, and in 2008, for the first time ever, its overall debt levels superseded its income.

Granada's return to the allotments first cultivated in Roman times may have a time limit, too, should plans to change the southern half of La Vega into a park by 2012 go ahead. Presumably the local bigwigs think that Spain's crisis will be done and dusted by then. Others are not so hopeful.

Provided by The Independent—from London, for Independent minds

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