4 ms·

Spain has real structural problems in its labor markets. But those kind of generous policies aren't unique to Spain within Europe. And other European countries

Spain has real structural problems in its labor markets. But those kind of generous policies aren't unique to Spain within Europe. And other European countries have far, far, far lower unemployment. Why? The answer is that employment policy does not have more to do with unemployment than any other metric. This is a story about a huge housing bubble and an awful currency union.

frankydp 14y ago
I agree. I did not mean to marginalize the other issues, just emphasize the very negative effects of labor policy. Spain has been an unemployment leader for 20 years, long before this recent bubble and even the Euro, so in some fashion policy has to play a larger role than outside influences. Spain has become a victim of the "perfect storm" in regards to internal and external forces.
corford 14y ago
Although many European countries also have generous policies, I think Spain is fairly unique in terms of the sheer level of generosity (and inflexibility) baked in to their labour laws. The only other comparable European state is Greece and their unemployment figures are running very close to those of Spain. Edit: And the reason Spain's overall unemployment rate is even worse than Greece is probably as you say due to the fact that they've suffered more than most from the housing and construction bust (since it accounted for such a large section of their economy). Edit 2: I think that both my argument and yours are overly simplistic. There are so many other factors at play which make it difficult (impossible) to point a finger at one particular cause. Examples: corruption, over reliance on tourism, lack of focussed structural investment (e.g. infrastructure), byzantine business laws and regulations, large sections of society regarding tax evasion as socially acceptable (with equally lax enforcement from the government) etc. Also, in Spain's case, there's also the dynamics of the Catalan and Basque issues to consider (which have economic impacts as well).

frankydp 14y ago

I agree. I did not mean to marginalize the other issues, just emphasize the very negative effects of labor policy. Spain has been an unemployment leader for 20 years, long before this recent bubble and even the Euro, so in some fashion policy has to play a larger role than outside influences. Spain has become a victim of the "perfect storm" in regards to internal and external forces.

corford 14y ago

Although many European countries also have generous policies, I think Spain is fairly unique in terms of the sheer level of generosity (and inflexibility) baked in to their labour laws. The only other comparable European state is Greece and their unemployment figures are running very close to those of Spain. Edit: And the reason Spain's overall unemployment rate is even worse than Greece is probably as you say due to the fact that they've suffered more than most from the housing and construction bust (since it accounted for such a large section of their economy). Edit 2: I think that both my argument and yours are overly simplistic. There are so many other factors at play which make it difficult (impossible) to point a finger at one particular cause. Examples: corruption, over reliance on tourism, lack of focussed structural investment (e.g. infrastructure), byzantine business laws and regulations, large sections of society regarding tax evasion as socially acceptable (with equally lax enforcement from the government) etc. Also, in Spain's case, there's also the dynamics of the Catalan and Basque issues to consider (which have economic impacts as well).