1
FINANCIAL CRISIS AND
UNEMPLOYMENT IN
SPAIN
BATSA EVANGELIA (2469)
KAZELOGLOU STAVROULA (2395)
KALFA GEORGINA (2404)
STERGIOU MARIA LOUIZA (2520)
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CONTENTS :
1. Introduction……………………………………………….3-4
2. Reasons for Spanish Economic Crisis………….4-5
3. Consequences……………………………………………5-9
4. Unemployment………………………………………….9-13
5. Conclusion………………………………………………. ..14
6. References………………………………………………….15
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1)Introduction
It is known that the global economy faces one of the most
powerful recession in history, since the years of the wars. It began
at 2009 and it has continued with the same intensity until today.
The effects of crisis showed up in many countries around the
world, without exception of societal spheres, the only difference
is the grade of its negative effects. On the other hand the collapse
of Lehman Brothers from 15 of September in 2008 to March in
2009, the American listing reached in the lowest level. So, in this
short interval the American listing began to shows the inception
of global crisis around the world. The damages that showed up
from the global crisis created a tight in banking system.
Furthermore, the public debt rose in a large degree and an
outflow of liquidity in contemporary economies. The crisis of Euro
pays the global economy leaving her exposed in this big debt.
With the lack of competitiveness the countries that affects more
is the countries of south Europe like Greece, Spain, Italy, Portugal.
Spain specifically, is a country which is located in the southwest
edge of Europe. This country abut with Portugal, south with
Maroco, and eastward with France. It’s a big country with the
population to reach the 46 millions. Moreover, the economy of
Spain depends on the agricultural productions while the tourism
ranges in large level. Nowadays, the currency of Spain is euro
because Spain is an important member of Europe. Formerly, Spain
used a currency which called “peseta” . Gross Domestic Product
(GDP) of 2009 went up in 1.051 billion euros, while the
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employments before crisis in 2007 was in 8%. Due to the
weakness of Spain’s economy, many countries tried to exploit its
problem, but the reasons that lead Spain in this difficult situation,
the effect on the citizens and the society in general, as the
increase of unemployment worth to be analyze below.
2) Reasons for Spanish Economic Crisis
Nowadays Spain is facing its worst crisis which is the extension of
the international financial crisis. There are many reasons for this
situation , some of them are mentioned in the following text.
2.1 Hurting regional governments
Spain’s 17 regional governments had large debts of their own. In
times of prosperity they had revenues from building permits and
fees. So they spent large amount of money on investments such
as parks, airports, highways etc. But when the property market
collapsed, regional governments could not afford to pay these
bills and manage their debts. Now they are under pressure from
the central government to cut spending, but local politicians are
reluctant to take unpopular action.
2.2 Bank bailout worries
Before the credit crunch, banks had been thriving thanks to the
rapid expansion of the property sector. But its collapse caused a
plunge in the value of the assets the loans were based on, and
meant borrowers had trouble making repayments. Furthermore,
the situation went worse by the fact that banks riskily borrowed
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money on the international markets to lend in developers and
homebuyers. Bankia, the country's fifth-largest lender, is a
notable example of Spain’s shaky banks when it announced it
would need (EURO) 19 billion to cover its toxic property loans and
assets in May 2012.
2.3 Debt dependency
The bank bailout has only made investors more worried about
Spain's financial position. The largest amount of Spanish
government bonds are held by country's banks, pension funds and
insurance companies. The foreign demand for Spanish bonds is
falling fast. Market-watchers concerned that Spanish banks
depend on each other: the government is issuing bonds, the
majority of which is being bought by its banks, only to use the
funds from the sale to prop up banks so that they can buy more
government debt.
3) Consequences
According to Germany’s Financial Minister Mr. Wolfgang
Schäuble, Spain was severely “damaged” by 2008 financial crisis
as it was ready to get back to European markets in a short period.
This statement turned down Spain’s Prime Minister Mr. Mariano
Rahoi. In a financial report Mr. Rahoi with the Financial Minister
of Spain Mr. Louis De Gidos presents the consequences of the
crisis.
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3.1 Consequences on Financial Sector
The results of Spain crisis made primarily visible at financial
sector.
3.1.1. Bankruptcy
Firstly, a big amount of enterprises announced bankruptcy. The
percentage of the enterprises reached 7.2% at 2010 and raised
the next year up to 15%. The highest rise was at 2012 when
bankruptcies went red to Spanish market up to 32.2%. Thankfully,
2013 was a better year and there was a decrease by 6.3%.
3.1.1.1. Companies colossus for the Spanish market had to shut
down their operation due to great debts. Characteristic examples
are “Royal Urbis” and “Fagor” whose debts were over 3.6 billion
euros each.
3.1.2. “Red loans”
In the highest levels of the last fifty years were ejected bad loans
that are well known as “red loans”. “Red loans” are distressed
loans which payment cannot be afforded. At 2013 overdebted
loans were up to 197 billion euros augmented by 5.4in compare
with the three previous years.
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3.1.3. Deficit
At 2009 the emergence of a large deficit with a variation from
2.9% of Gross Domestic product (GDP) of surplus led to a deficit of
-31.2% of Gross Domestic product (GDP). The growth of the deficit
remained sharp at 2010 – 2011 as you can see in the diagram
below.
3.1.4. Poverty
3.1.4.1. The crisis has brought to the poverty line most of the
households which cannot respond even to their basic needs.
Spanish people who are paid with 307 euros or less were about to
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5.1 million at 2013,a number doubled from 2012 (3.5 million).
There are also 700.000 households that did not have any income
at all at 2013 versus 300.000at 2008.
3.1.4.2. It has been estimated that 34% of children under eighteen
years old run the risk of poverty or social exclusion. According to
the organization “Save the Children” 2.8 million kids are at the risk
of poverty and 25% of their families cannot afford buying the
essential food. 225.000 children fainted over 2013 at schools of
malnourishment.
3.1.5. Trade; Imports – Exports
As regards the area of marketing Spain mainly specialize in export
of fruits, citrus and olive oil. From 2008 to 2013 it is observed a
decrease which became more intense the biennium 2012-2013.
There was a dramatic decline in oil reduction that reached -14.5%.
Also, in line with the Spanish federation of Producers and
Exporters of Fruits (Fepex), fruit trade and specifically exports
reduced by 10% at 2013 against 8% at 2012 and 7.3% at 2011. In
contrast there was an increase at important mostly from France
(37%).
3.2. Psychological Consequences
The results concerning the psychological sector or Secondary
sector as it is called in financial terms, are consequences that
cannot value with money. Due to poverty and debt weight loss,
outbreaks of mental disorders have increased. Because of the
difficult financial situation pessimism has increased about the
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future leading to more outbreaks of sadness, anger, depression
even suicide.
3.2.1. Albert Badurra recently said: “ the (emotional) support lines
had high numbers of calls for psychological problems on economic
crisis. 32% of calls relate to psychological assistance linked to to
difficult economic situation in the workplace.
3.3. Health Sector
Unfortunately, the recession have led t the exclusion from their
health rights 873.000 people from 2009 to 2013. The public
opinion was shocked from 30% of school children who fainted and
could not be transferred to hospitals as their health insurance
could not cover the expenses.
3.4. Unemployment
Last but not least one of the most important results of Spanish
economic crisis is unemployment which is described in detail in
the next section.
4) Unemployment
Spain is one of the most seriously affected by the financial crisis of
all the European countries. What makes it unique among
European members is its staggering unemployment rate.
4.1 Percentages about ages
Unemployment is an important factor that influences mostly
youth in ages between eighteen(18) to twenty four (24).This rate
is in the highest level than any other time and almost one out of
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two is not able to find a job. Specifically, as you can discern in the
following table with the previous rate in ages twenty five until
sixty the rate maintained the same level of 23.5%.
Ages Rate (%)
16-25
53.6
25-60
23.5
For those under age 25, the rate keeps increasing, and the
institute also reported that Spain now has 1.6 million households
in which no one has work.
In Spain the rate of unemployment affects the circle of the
European economy and in countries like and United Kingdom it
can be argued that is stagnated. This rate in wealthy periods has
nearly achieved 20% (2000) and at 18% in till the winter of 2007.
Over the past five years the situation started deteriorating and in
the winter of 2013 reached its highest point 57% in ages under
twenty five (25). According to the data’s of EPA in the fourth
quarter of 2012 jobless people were up to 74.4% at ages sixteen
(16) to nineteen (19), 51.68% at ages twenty (20) to twenty four
(24) and 34.36% at ages twenty five (25) to forty (40). Also its
obvious that Spain owns the first place in Not in
Empoyment,Education or training (NEET)
One thing Spaniards should consider about is that people need
more than one and a half year in order to find a job even though
their high level of qualifications. Moreover, a main problem which
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raises the rate of unemployment is temporary jobs because after
a short period of time people lose their works and become
unemployed. This rate in the third semester of 2012 arrives at 43
% at ages of fifteen (15) to twenty four (24).
4.2 Percentages about sexes
As far as sex is concerned there is not a big difference in rates of
unemployment between men and women. The table below
illustrates in detail the rates of unemployment between the two
sexes over the past five years.
Ages Males (%) Females (%)
16-19
25.1 38.8
20-24
12.4 17.3
25-29
7.7 13.0
30-34
6.2 11.4
35-39
5.2 9.6
40-44
4.5 10.1
45-49
3.7 7.7
50-54
4.0 9.4
55-59
4.9 8.1
60-64
5.0 4.7
65-70
2.1 2.5
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70 plus
0.3 0.0
It is observed that the percentage of women at ages sixteen (16)
to forty (40) is much higher than males’. This mostly happens
because despite the progress of the last decades women are still
facing problems with their accession in the workplace.
Specifically, the reasons that this happens are social, educational
and institutional. The family acts as an inhibitory factor due to the
fact that they cannot combine both family and work. As well,
there are some restrictions because of the sexism they are facing
so they cannot climb to senior management positions. The most
basic thing is that despite laws of the Labor Law there is a gap
between theory and action and this explains the high
unemployment rates at women of these ages. In contrast, at ages
over forty (40) there is a smaller deviation between sex’s rates
because there are less people who are looking for jobs.
4.3 Analysis of the table
In one hand concerning men there is a noticeable difference
between the ages of sixteen to nineteen and twenty to twenty
four as in the first rank the percentage (25.1%) is almost the
double from the second one (12.4%). In the next age group (2529) the decline reaches 5 percentage points. After that, the
reduction of the rates is steady and close to 1%.On the other hand
women’s rate at the ages of sixteen to nineteen(16-19) is more
than the half of the percentage at ages twenty to twenty four
(20-24).Among the other ages it is observed that there is a
moderate drop at the number of unemployed women.
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Chart of unemployment between two sexes:
Unemployment in Males and Females:
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5.Conclusion
In conclusion, after all this sociable and financial situation that
Spain has been through the last few years it is clear that the
International Monetary Fund (IMF) had positive and substantial
effect in the improvement of the Spanish economy and banking
system. In addition, 2014 is considered one of the best years of
economic recovery and it is projected that will overcome the
financial crisis until 2016.
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6) References
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viii.
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xiv.
xv.
xvi.
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