Spanish Graduates Stuck Without Stable Jobs to Pay Rent

Photographer: Angel Navarrete/Bloomberg

An employment center in Madrid, Spain. Close

An employment center in Madrid, Spain.

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Photographer: Angel Navarrete/Bloomberg

An employment center in Madrid, Spain.

Stuck with her student job four years after graduating in the hope of becoming a social worker, Beatriz Biota still can’t move out of her parents’ home.

“All I’ve found is unpaid voluntary work,” Biota, 29, said in a telephone interview from Zaragoza, in the north of Spain. “I’ve kept my weekend job advertising products in supermarkets and I’d be willing to go full time too. But that isn’t an option.”

The legacy of the worst slump in Spain’s democratic history is blighting a generation of work-hungry jobseekers who either can’t find employment at all or enough of it to live on. About one in four Spaniards remains without a job even after the economy showed one year of growth, according to government data released today.

While that rate is slowly declining, signs that job creation is reviving in the euro region’s fourth-largest economy may not provide enough stability to those seeking financial independence. Along with Biota, who is clinging to her 350-euro-a-month ($471), 11-months-a-year job until she finds paid social work, 76 percent of Spaniards her age or less live with their families.

A Long Recession's Long Shadow

The country’s unemployment rate fell to 24.5 percent in the three months through June from 25.9 percent in the previous quarter, Spain’s national statistics institute in Madrid said today. While that is less than the median estimate of 24.9 percent in a Bloomberg News survey, it remains the second-highest rate in the European Union after Greece.

“This isn’t enough to say that the recovery is consolidating,” said Maria Angels Valls, a professor at the Esade Business School in Barcelona, in an e-mailed comment. “The decline in the number of unemployed people in recent months has largely been due to the workforce’s shrinking.”

Job Creation

Growth accelerated to 0.5 percent in the three months through June, the Bank of Spain said yesterday. That means economic activity in the country has probably expanded faster than that in the euro area for two straight quarters for the first time since 2007. Economists forecast the region’s economy grew 0.3 percent in the three months through June.

“Everything seems to indicate that the economic recovery is gaining momentum, and that growth forecasts will be revised upward,” Deputy Economy Minister Fernando Jimenez Latorre told reporters in Madrid today.

The government’s current prediction, which Latorre said will be revised in September, is for a 1.2 percent gross domestic product gain this year after it contracted by as much in 2013.

Temporary Work

The government, which this month announced government incentives for employers to hire young people, says the economic improvement is creating jobs, reflected by an increase in the number of people contributing to the state-run pensions system, or “social security.”

The number of jobs gained 1.1 percent from a year ago in the second quarter, INE data released today show. That’s the first annual increase in six years, a period which saw Spain enter and emerge from two recessions. In seasonally adjusted terms, job creation increased from the previous three months for a third straight quarter.

“Second-quarter unemployment data show that the improvement on the labor market is structural,” Prime Minister Mariano Rajoy said in Madrid today. “Spain’s labor market has changed cycles.”

His government introduced legislation in 2012 to make it easier for companies to cut wages and fire workers in order to encourage hiring. The law also sought to promote open-ended contracts over temporary ones, which have proliferated since the 1980s in an economy where construction and services, such as tourism, account for 73 of added value and 82 percent of the workforce.

‘Precarious Jobs’

Even so, about 92 percent of new contracts were temporary in the first half of this year, a share that has been stable in the last 25 years, an IESE Business School study shows. In the second quarter, 24 percent of employees had short-term employment, compared with 23 percent in the previous quarter, according to INE. The share rose to 51.5 percent from 50 percent for under 30 year-olds.

Unevenly Shared

“The duality of Spain’s labor market means that protection is very unevenly shared and that many young people have precarious jobs,” said Javier Diaz-Gimenez, a professor of economics at IESE business school in Madrid. “That adds to Spain’s family culture, which doesn’t encourage kids’ moving out, and the lack of availability of bank loans.”

While Spain is no exception in southern and eastern Europe, about half of under 30 year-olds live at home in France and 40 percent or less in Scandinavian countries. That reflects a jobless rate of 42 percent in that age group in Spain, more than twice the rate in France or Sweden.

“It’s not going to become easier to set up home,” Alfredo Arahuetes Garcia, head of the economy department at Pontificia Comillas University in Madrid, said in a telephone interview. “It’s very simple. On the one hand, wages have gone down, and on the other, rents or house prices have fallen very little and will rise again with the recovery.”

The lack of jobs motivated Pablo Padilla, 25, to keep on studying after graduating in sociology in 2010. He also started a protest group named “Youth Without a Future” along with friends, flatmates and fellow students the same year.

‘Go Hungry’

“We already had to choose between precariousness, unemployment and exile in 2005, before the crisis, we don’t want that anymore,” he said.

Spanish youth have also suffered more from downward wage pressure than the rest of the country’s population. While the average annual salary has fallen 0.3 percent since 2010, it has dropped 15 percent for those aged 20 to 24 and 8 percent for those aged 25 to 29.

“In Spain, Portugal or Greece, the level of unemployment is bound to push wages down for new hires,” said Bruno Ducoudre, an economist at Observatoire Francais des Conjonctures Economiques in Paris. “That’s even more true for young people who are generally less experienced and focus on grabbing any opportunity.”

In Jerez de la Frontera in southern Spain, Inmaculada Roman says she’d sink into a depression if she stopped to think about her job prospects. She’s reached the age of 38 juggling between replacements as a chemist, teaching and odd jobs.

“I’ve never gone hungry, but my parents won’t be around for ever,” she said. “It’s very, very dark.”

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editors responsible for this story: Patrick Henry at phenry8@bloomberg.net Kevin Costelloe, Zoe Schneeweiss

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