The Golden Years of the Spanish Economy: a Model based on Scarcity

Emigration is one of the top issues in Spain due to its financial turmoil(1), which has forced many young highly qualified people to leave the country. The often-called “diaspora” has unveiled the deep instability of the job market, traditionally regulated in favour of the big corporations. According to estimates,  about 2 million people have left Spain since the beginning of the crisis in 2008. Looking abroad for better professional prospects is not a new phenomenon in the most unstable job market in Europe. As figures and testimonials show in the following article, job insecurity was deeply rooted in the country before the economic crash.


Noelia Martínez Castellanos

[cml_media_alt id='2169']Burbuja-Inmobiliaria II[/cml_media_alt]In the current global economy, the Russian roulette of immigration moves apace (2). Countries that less than 10 years ago received immigrants have now become a source for those countries able to overcome the financial crisis that started in 2008. Spain is a case in point (2).

The dramatic growth of the Spanish macro economy, especially in the period 2000-2008, attracted immigrants from all continents. This boom was a direct consequence of the real estate bubble (a similar case to the Celtic Tiger in Ireland). The immigrant population increased from 1,9% to 14% in only ten years (1999-2009), according to the Spanish National Institute of Statistic (INE in Spanish)

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In contrast to Britain, the growth in immigration has been a circumstantial trend in Spanish history. During the 60’s, when Spain was still a developing country, more than 2 million people left the country to settle in the Centre and North of Europe. 80% of that population were working class and most of them, illiterate. In fact, Spain was categorised as a developing country until 1981 by the International Monetary Fund (IMF).

Spain was categorised as a developing country by the IMF until 1981

In this new millennium, the reality is different for Spanish migrants. Although the number of people who have left the country until now (more than 2 million) is similar to that in the 60’s, Spain is currently one of the European countries with a higher level of education. The percentage of people age 24 to 34 with a higher level of education is 44% for women and 34% for men. These figures show that most of the people who leave the country are youngsters with a high level of education (although calculating these figures is complex). The Media often describe this as the brain drain (3).

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Uncertainty and poverty

Despite the differe[cml_media_alt id='2222']parados[/cml_media_alt]nces between the migration phenomena of 60’s and 2000’s, poverty and job insecurity are a common factor in both cases. Nonetheless, the flow of immigrants has also existed, although in a more unnoticed way, during periods of prosperity as is shown in the statistics of social status in countries such as the United Kingdom.

In this article we examine the continuing precarious nature of the labour market in Spain in the last 30 years, both in times of prosperity and crisis. We will analyse some of its aspects to explain how the culture of precariousness has become an integral part of the social and economic structure of the country.

Cosmopolita Scotland has interviewed economist Santiago Niño Becerra who has examined the historic causes of the most unstable labour market in Europe (with an unemployment rate of 23.4% at the beginning of 2015, 50.9% of which are people age less than 25 years old)

A labour market far away from the European model

Unemployment and underemployment have burdened (4) Spain during the past decades. Both, centre-left and centre-right Spanish governments have put all their effort into reducing unemployment rates rather than improving job conditions and quality, as some experts have pointed out.

When an economy is prosperous it is important to continually check that salaries are growing in line (5) with the standards of living and that employment is stable. For decades, governments have used as principal indicators of economic growth significant rise in the Gross Domestic Product and the per capita income and an unprecedented job creation. However, whether the national wealth is equitably shared is something that has never been questioned.

Spanish governments have put all their effort into reducing unemployment rates rather than improving job conditions and quality

The contribution of salaried employees to the GDP fell off as a consequence of the creation of jobs, which were more and more precarious and unstable. In fact, the percentage dropped to a historic minimum in 2006: 46.4% of GDP, 3.2 points less than in 1996. To this has to be added a loss of purchasing power which was aggravated by a continuous rise in the cost of living; much higher that in many other European countries (more than 14.5% between 2000 and 2010 according to Eurostat).

[cml_media_alt id='2171']sistema bancario en quiebra[/cml_media_alt]The growth in job creation was accompanied by an increase in instability. In this sense, while the profits of companies grew by 76% from 1996 to 2005, the average salary decreased by 4%, according to a report from the Organisation for Economic Co-operation and Development (OECD). The growth of a country at a macro economic level does not necessarily indicate a higher degree of social cohesion or a decrease in the gap between rich and poor. In the case of Spain, the evidence suggests that the economic miracle in the country was achieved the use of cheap labour, as figures from the OECD and Eurostat indicate.

While the profits of companies grew by 76% from 1996 to 2005, the average salary decreased by 4%, according to the OECD

Highly Qualified and No Future

[cml_media_alt id='2264']fuga-de-cerebros[/cml_media_alt]The excess of qualified labour and the precarious nature of work motivated the migration of many young people before the start of the crisis. In view of this, unsurprisingly some experts disagree with the argument that the brain drain is a new phenomenon. The number of university graduates increased steadily from the end of the 1990s. By 2003, 36% of people aged 30-34 had a degree, above the OECD’s average (28%). During the economic boom there was evidence to suggest that the fragile job market was overloaded with qualified people. This unbalance was coined as “waste of highly-qualified people”.

Most of the jobs created during the real estate bubble were unskilled. Paradoxically; these were much better paid than qualified jobs. Figures shows that 34% of young people were over qualified for their job, and 2 out of 3 had a precarious contract.

With this undiversified economy, the younger people already foresaw bleak (6) future. In 2006, half of those unemployed were in the 16-29 age range according to a CNT-AIT Zamora report. In addition, badly paid internships were the only option for these starting their careers in their field of expertise. They dreamt of being mileuristas (earning €1,000 a month). In 2006, of the 64% of people aged 18 – 34 who earned their own living, half of them needed financial help from other people.

Professional Women, a Double Challenge

[cml_media_alt id='1829']images[/cml_media_alt]If the Spanish economic success before the crisis helped to obfuscate the real state of the labour market, the status of women did not do much better. The financial crisis has put the gender gap back ten years. For instance, in 2012, women earned 24% less than men, according to UGT (comparing their gross salary). This has been an inherent feature of women’s access to the job market despite the steadily increasing trend of female participation in the job market.

Gender equality has been a constant challenge for different Governments since the beginning of democracy. The status of housekeeping work has always been below the radar in a country with a well-established macho culture. Moreover, the participation of women in the job market resulted in them having a double burden, inside and outside the house. Inequality between men and women is one of the legacies of the dictatorship. Under democratic rule governments have implemented gender equality legal frameworks. But sexist values still prevail. Women still look after men. The economist, expert in gender issues, Amaia Pérez Orozco says that changes in both the public and private sphere are needed to achieve equality at work. This means sharing equally free time as well as household tasks. Orozco says “It is very nice to talk about equality at work and not think about who cleans the toilet at home“.

Amara Pérez Orozco: “It is very nice to talk about equality at work and not think about who cleans the toilet at home”

[cml_media_alt id='2275']GenderGap_EDIIMA20150120_0641_5[/cml_media_alt]The prevalence of sexist social values obliged women to seek part-time jobs. In 2006, 324,300 Spaniards worked part-time to look after dependents, according to official Spanish statistics (EPA). 96% of them were womenIn addition, in 2009-10, whereas women spent 44 minutes per day looking after others, men spent only 16, according to the study “balancing work, balancing life” (OECD). The difference is even greater when looking at the time spend on housekeeping: women (127 minutes/day), whereas men (76 minutes/day). This shows that inequality is an ongoing challenge.

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Neoliberal Policies and Temporary Work

[cml_media_alt id='2280']spanish-revolution[/cml_media_alt]The current financial, political and social situation in Spain is a result of a profound productive and economic restructuring that has been implemented in the country since the end of Franco’s dictatorship. The Moncloa Pacts signed in 1977, brought certain wage and labour rights. Since then, all efforts have been focused on deregulating and freeing up the labour market in favour of big corporations. This neoliberal model of public intervention has caused an increasing insecurity in the labour market. Economist Albert Recio points out that the different labour reforms since the 80’s are a good example of this.

During the dictatorship, Franco created a system based on protectionism. This delayed the industrialisation process of the country. Cheap labour and the flexibility of employment laws speeded up the process at the start of democracy. In 1976, the GDP per capita was around 76% of the average in Europe; in 2006, 98.3%. Different governments have managed to place Spain on the world rich league in record time. But, not everyone trusts the long-term sustainability of a model based on job insecurity, mass tourism and speculative urbanism: “You never know how long a specific situation can last for. In the past years we have had many examples of economic miracles that have become nightmares”, according to economist Albert Recio.

The greatest challenges the Spanish market has faced since the beginning of democracy are high rates of short-term and temporary contracts, especially since the labour reform act of 1984. In 1997, only 4% of the job contracts were permanent. The temporary rate which was 16% in 1988, increased to 60% after 10 years, 40% more than the European average. The agreements and reforms that followed only served to worsen the situation. In 2005, there were nearly 5 millions casual worker, 1.5million more than in 1997. Also, 91% of the new contracts were temporary and less than 7% of them were signed under reasonable conditions of stability.

The crisis aggravated and revealed a problem that was already deeply rooted in the country’s labour structure and practices. In 2004, the same year that 7.6 million contracts were signed by only 2.2 million young people, the European Commission (EC) warned the Spanish government about their low level of transitions from temporary to permanent employment. The Labour Reform Act of 2006 was presented as a plan to fight the problem. However, just before the crisis, the level of temporary contracts was double than in the rest of the European Union. The culture of insecurity practised by all Governments since the beginning of democracy increased the vulnerability of the country during the financial crisis.

In 2004 the EC warned the Spanish government about their low level of transitions from temporary to permanent employment

The Spanish labour market has never abandoned precariousness (7), not even when it was doing economically better. A political history that prevented membership of Europe during the restructuring of industry, a lack of economic diversification and neoliberal policies to benefit powerful financial structures, all have contributed to the creation of an unstable labour market and a vulnerable society that has always found reason to seek opportunities outside Spain.

Use of English for Spanish Speakers

(1) Turmoil.

  • Definition: a state of commotion, disorder, or disturbance.
  • Example: “Emigration is one of the top issues in Spain due to its financial turmoil […]” (” LIT. La emigración es uno de los temas prioritarios en España debido a la agitación financiera“)
  • Translation: confusión, agitación. 

(2) Moves apace.

  • Example: “In the current global economy, the Russian roulette of immigration moves apace”.  (“En la economía global la ruleta rusa de la emigración gira cada vez más rápido”). 
  • Translation: girar cada vez más rápido. 

(3) Brain drain.

  • Example: “The Media often describe this as the brain drain. (” Los medios de comunicación describen esto como fuga de cerebros”). 
  • Translation: fuga de cerebros. 

(4) Have burdened.

  • Definition: vtr. add pressure, worry.
  • Example:”Unemployment and underemployment have burdened Spain during the past decades”. (“El desempleo y el infraempleo han sido uno de las lastres en las últimas décadas […]”)
  • Translation:han añadido presión.

(5) In line with.

  • Definition: alongside with.
  • Example: “When an economy is prosperous it is important to continually check that salaries are growing in line (5) with the standards of living and that employment is stable”. (“Cuando una economía es próspera es siempre importante comprobar  que los salarios crecen acorde con el coste de vida y que el empleo es estable.”)
  • Translation: acorde con, junto con. 

(6) Bleak.

  • Definition: without hope or encouragement; dreary.
  • Example: “With this undiversified economy, the younger people already foresaw bleak future”.
  • Translation: desalentador.

(7) Precariousness.

  • Definition: insecure.
  • Example: “The Spanish labour market has never abandoned precariousness, not even when it was doing economically better”. (“El mercado laboral español nunca ha abandonado la precariedad, incluso cuando la economía era próspera.“)
  • Translation: precariedad.
  • Comment: in this context English speakers often use other terms such as job insecurity, instability, poor working conditions.

Autor: Noelia Martinez

Periodista con especialidad en estudios africanos y gran experiencia en interculturalidad (Escocia, Filipinas, estudios africanos, España). Emprendedora autónoma, fundadora de Not Just Words, empresa proveedora de servicios de traducción (ING>ESP), comunicación y redacción de contenido. Twitter @peli_1982 o Linkedin.

Specialised journalist in African Studies with great experience in intercultural issues (Scotland, Philippines, African Studies, Spain). Self-employed entrepreneur trading as Not Just Words providing translation (EN>SP) communication and content writing services. Twitter @peli_1982 or Linkedin.

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