Monday, January 31, 2011
Spain's unemployment rate grows to 20%
It's fair to say that Spain and its people have enjoyed their fair share of international victories (Nadal, Real Madrid, 2010 World Cup) in recent years. The country earned yet another first place title; but this time Spaniards aren't celebrating. On Friday, the unemployment rate in Spain climbed to a 13-year record of 20.33%, the highest level in the industrialized world. With roughly 4.7 million citizens without jobs now, Spain's economic plight of the past two years only seem to be worsening. As I see it, the Spanish economy looks to be on the final cusp of collapse as it struggles against the quicksand-effects of unemployment, debt, and a banking meltdown. I believe an emergency bailout by the European Union is imminent for Spain, toppling a new domino of the European debt crisis.
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4 comments:
I agree that bailout by the European Union will most likely be necessary in order for Spain to survive this. It was predicted that the jobless rate is going to decrease into 2012 but unless drastic changes are made I do not see that happening. I see that prediction being used more to ease the population than what is actually the truth. This prediction was most likely a cover up for the fact that one in two spaniards fear that the jobless situation will get worse. Having a jobless rate of 20% should be enough to force the government to essentially drop everything they're doing, including reforms to move the retirement age up, and figure out how to create more jobs.
If half of the Spaniards fear that the jobless situation will get worse then this would greatly affect the consumer confidence. Therefore, the people are reluctant to spend any of their money. What the government can do is to try increase the consumer confidence by offering more incentives somehow then this would lead to the creation of jobs.
European countries usually have higher unemployment rate than the United States. I believe it has something to do with its welfare system. In some European countries, you make more by staying at home(because taxes on your wage). Spain won World Cup 2010, and it for sure help its economy at least a little bit(people are happy, so spend more money). Maybe win the European Cup in 2012 can help Spain again.
20 % is a ridiculous number (one out of five people is unemployed!). Who would you blame for it? The government that didn’t take appropriate measures, businesses that fired employees, economic system or is it just a bad luck? If we look at the stimulus packages data provided by the International Monetary Fund it appears that Spain’s stimulus package, as percent of GDP, was one of the smallest in the EU. So it is no surprise that the economy is struggling.
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