Congress of Deputies of Spain: Youth Unemployment

Letter to Delegates

Dear Delegates,

It is my pleasure to welcome you to the Congreso de los Diputados at Yale Model Government Europe (YMGE). My name is Genna Abele and I am a junior in Berkeley College at Yale University. I am originally from Palos Verdes, California, and I am a Global Affairs major. On campus, in addition to YMGE, I am a member of the Women’s Club Water Polo team, Yale UNICEF, and Net Impact. During my free time, I love swimming, reading, music, and spending time with family and friends.

I am looking forward to working with you during the conference! I am excited to listen to you engage in discussing the challenges facing Spain today and coming up with creative solutions on how to best move forward and overcome the obstacles currently hindering progress. By focusing on the topics of Catalonian independence and youth unemployment, we will work together to develop and debate possible resolutions for these important issues.

My goal is to ensure that YMGE 2017 is a memorable experience for every delegate, and I want to be responsive to the committee’s needs. During the conference, I would be happy to meet with you to discuss your ideas for the committee. If you have any questions prior to the conference, please reach out to me by emailing me at genevieve.abele@yale.edu.

I hope that you will take the time to read this topic guide and properly prepare for committee. Please research your member’s policy in depth in order to have a solid understanding of the issues at hand because this guide is only a starting point.

Best of luck in your preparation for committee,

Genna Abele

Director, Congreso de los Diputados

genevieve.abele@yale.edu

The Spanish Constitution of 1978 established a bicameral legislative branch called the Cortes Generales (General Courts). The General Courts is made up of the Congreso de los Diputados (Congress of Deputies) and the Senado (Senate), and both chambers represent all of Spain. According to Section 66 of the Constitution, the functions of both chambers are the exercise of the legislative power of the State, the adoption of its budget, and the control of the action of the government. However, the Congress of Deputies and the Senate do not operate on the same level. The Constitution has endowed Congress with a series of duties and powers that demonstrate its supremacy. Because of this, Congress has the power to authorize the formation of the government, to cause its cessation, and to confirm and dismiss the Prime Minister. Congress is also the first to know about procedures of bills and of budgets, and must confirm or reject amendments or vetoes that the Senate approves concerning these legislative texts. The Congress of Deputies governs according to the Constitution and its Standing Orders.

All members are chosen by universal suffrage, which is free, equal, direct and secret. The electoral constituency is the province. Electoral law assigns two seats for each province and distributes the rest in proportion to the respective population. Likewise, within each electoral district the election is verified by a proportional system, in such a way that each political party is given a number of seats according to the number of votes received. The Congress is elected for four years. The term of office of members therefore ends four years after their election or on the day on which the Congress is dissolved. Members of Congress represent their electoral constituency as well as the Spanish people. Election by province is an instrument that assists in forming the body of representation for the will of the Spanish people.

The President of the Congress of Deputies is the analogue to a speaker and presides over debates. In the Congress, members of the Parliament (MPs) from the political parties, or groups of parties, form parliamentary groups. Groups must be formed by at least fifteen MPs, but a group can also be formed with only five MPs if the parties received at least five percent of the nationwide vote, or fifteen percent of the votes in the constituencies in which they ran. The formation of the parliamentary groups takes place at the beginning of each legislature. The MPs belonging to parties who cannot create their own parliamentary group form the Mixed Group.

The Spanish financial crisis began in 2008 during the world financial crisis of 2007 to 2008. In Spain, the housing bubble and the accompanying unsustainable high GDP growth rate formed major causes of the crisis. The ballooning tax revenues from the booming property investment and construction sectors kept the Spanish government's revenue in surplus, despite strong increases in expenditure, until 2007. Spaniards refer to the decade leading up to 2008 as las vacas gordas, the years of the “fat cows”. The Spanish government supported this economic development by relaxing supervision of the financial sector and thereby allowing the banks to violate International Accounting Standards Board regulations. The banks in Spain were able to hide losses and earnings volatility, mislead regulators, analysts, and investors, and thereby finance the Spanish real estate bubble. The results of the crisis were devastating for Spain, including a strong economic downturn, a severe increase in unemployment, and bankruptcies of major companies. In 2012, the country was unable to bailout its financial sector and had to apply for a €100 billion rescue package provided by the European Stability Mechanism (ESM).

Drastically rising unemployment affected the entire country, but especially migrants, the poorly educated, and, above all others, the young. Spain has a two-tier labor market, in which workers on permanent contracts enjoy better pay, more benefits and are more difficult to fire than workers on temporary contracts. When the crisis hit, companies up and down the country responded by firing the people they could fire easily: those who were still on temporary contracts. Most of those on temporary contracts, unsurprisingly, were young people fresh out of school or university. The early years of the crisis cut through their ranks brutally and indiscriminately: in the services sector, between 2007 and 2011, one in four young workers lost their job; in industry, every second worker aged 20-29 was sacked; in construction, it was two out of three. Those who entered the job market during those years faced even tougher odds.

In 2013, Spain’s youth unemployment rate stood at 55 per cent, the second-highest in the European Union behind Greece. One in four Spaniards between 18 and 29 were not in education, training or employment, one of the highest rates in the developed world. Close to 1.7 million Spaniards under the age of 30 were out of work, with almost 900,000 already classified as long-term unemployed, or without a job for more than a year.

Eight out of ten of the unemployed youth had worked previously, meaning their unemployment was a result of job destruction wreaked by the crisis, especially in the construction sector where many of these young people gained employment during the property boom years, stopping their studies. The young and unemployed also included a significant number of immigrants who either were directly integrated into the labor market when they arrived in Spain in the boom years and lost their jobs, or reached working age in the midst of the crisis. Their demographic weight among the youngest members of the population was and is sizeable: those born abroad account for 18% of all 16-24 year olds resident in Spain, according to the Spanish municipal register Unemployment was and continues to be substantially higher among foreign-born young people than among native Spaniards.

The effect of the worldwide financial crisis was exacerbated in Spain due to the two-tiered labor market that has evolved over the last 40 years. Much of the new hiring after the 1970s took place through temporary employment contracts, while older workers retained permanent contracts. Just before the 2008 financial crisis, around a third of Spain’s workers were on temporary contracts, far higher than the European average. When the crisis hit, it was easy to lay off the temporary workers. The persistence of overly protective labor contracts alongside temporary ones with too few protections has created inefficiencies within Spanish companies that have dampened economic growth and post-crisis recovery.

Questions to Consider:

Why did Spain experience the 2007-2008 worldwide financial crisis on such a larger and more devastating scale than almost all of the other EU nations?

What could the Spanish government have done during and immediately following the crisis to reduce the persistent problem of high youth unemployment?

Persistence of High Youth Unemployment

Even today, with a solid recovery gaining momentum, youth unemployment in Spain remains a rampant problem. Official data show that more than 1.85 million Spaniards under the age of 34 are unemployed, and the youth unemployment rate currently stands at 39.30 percent. Thousands of young people with university degrees remain unemployed or underemployed, grappling with a revolving door of temporary contracts that come with few benefits, lower pay than permanent jobs, and the risk of being laid off with little recourse. For many young people in Spain, it has become a way of life: a series of so-called junk contracts for low- or no-pay work that often verges on exploitation, with long gaps of joblessness in between. Young people caught in that cycle are at the edge of a growing category that economists call NEETs: those who are not in employment, education or training. Those who do find work usually labor in precarious conditions, on temporary contracts, and almost always for little money. Safe, permanent positions with benefits and decent pay are rare.

No one, not even the government in Madrid, expects the scourge of mass unemployment to lift any time soon. The Spanish economy may no longer be in recession, and jobless numbers are down from their peak last year. But those who had the bad fortune to leave a Spanish school or university in the past few years, or who are starting their working life, face a bleak future. With jobs still in desperately short supply, many are likely to be afflicted by what economists call the “scarring effect”, a well-known pattern associated with young workers who fail to find work early on: even if they do eventually join the labor market, their earnings and career prospects will never be what they could have been.

Social Effects

Their loss, however, is not just about money and economic advancement. Shut out of the housing market and forced to live with their parents or other relatives, countless young Spaniards are in effect barred from starting their own families. For some, locked in perpetual financial dependence and economic insecurity, that moment may never come. Four out of five Spaniards aged 16-29 still live with their parents, far more than before the crisis. Many are living off handouts from their parents and grandparents, who have been forced to provide a roof and financial safety net for their grown-up children. Some receive a few hundred euros in unemployment benefits, but only because they previously paid into the social security system. Either way there is very little money to spread around. The very idea of long-term planning, of slowly graduating towards adulthood and independence, has begun to disappear.

Alessandro Gentile, a sociologist who teaches at the University of Zaragoza, worries how Spain’s youth will fare a decade from now, and what the country that will depend on them will look like. “This crisis is not like the other crises. It is a crisis that will leave scars,” he says. “Leaving home doesn’t just mean being independent. It also means assuming commitment and responsibility. The danger is that you will end up with a passive generation, and one that is not ready to face risks and challenges.” Manuel de la Rocha, an economist at Fundación Alternativas, a Madrid-based think-tank, voices similar fears: “We will get out of this crisis but there will be a generation that has been left behind. A lot of young people have seen their dreams and aspirations evaporate.”

In fact, the country’s jobs market is not just making young people poor; it is also affecting their mental health. Spanish psychologists have been warning for years that the generation that came of age during the crisis is suffering in ways far beyond income statistics and labor market data. “Without a safe job, you live without certainty and without security,” says Josep M. Blanch, a professor of applied social psychology at the Autònoma University in Barcelona. “You don’t know whether you should have children and start a family. You lose the ability to plan and manage your life: it is like trying to drive a car without a steering wheel.” Spain’s labor market, where millions oscillate between no job and precarious jobs, is a mental health challenge as much as an economic one. Young Spaniards, says Prof Blanch, have been “forced to live in permanent adolescence”, their path towards adulthood and full citizenship blocked. They are more likely to suffer anxiety and depression and, often, a burning sense of injustice.

Spain’s youth unemployment crisis has led to fury against Spain’s political system Juventud Sin Futuro (Youth Without Future), one of the most notable social platforms to have emerged since the start of the Spanish crisis. “We used to have certain promises about our lives and how our lives would pan out,” Ramón, one of the spokespeople of the group, says. “They told us that if we study and go to college and learn languages, there would be a future for us, that we would be able to find work and live our life. That promise existed until 2008. But now the promise is broken for me and for a whole generation.”

Tens of thousands of young people have begun to apply for jobs and grants outside Spain. Numbers are hard to verify but there is little doubt that Spain is losing some of its best-educated and most talented young, those with languages, degrees and the drive to build a life abroad. An estimated 100,000 university graduates have left Spain to go to Germany, Britain, and the Nordic states for jobs in engineering, science and medicine. Many others have gone farther afield to Australia, Canada and the United States. The current migration “is mostly the skilled part of the population,” said Massimiliano Mascherini, a research manager at Eurofound, a European Union research agency. “It is alarming for the countries that young people are leaving, and it should be a big source of concern for their governments.” The alternative for Spanish youth, staying behind, means accepting that things like a steady job, a safe pension, drawing your own salary, buying your own house, or raising your own family are no longer available.

Early School Leaving

In the years of the building boom, Spain’s construction sector was in urgent need of low-skilled workers to keep the cranes lifting and the concrete pouring. The industry ended up scouting for labor on Spain’s school yards, where the promise of honest work and easy money caused hundreds of thousands of teenagers to leave school during the boom years with just the basic school-leaving certificate, or with no certificate at all. Their departures helped Spain become the country with the highest share of “early school leavers” in the EU.

When boom turned to bust, young workers found themselves out on the street – older, sometimes with families, but still without the skills demanded by Spain’s increasingly picky employers. Of all the groups and subgroups that make up Spain’s army of unemployed, these are the people that policy makers and analysts worry about the most. With every month that passes, their chances of finding work diminish: history shows that even when an economy turns round, unskilled workers with a long record of unemployment struggle more than anyone else to find a job.

Questions to Consider:

How can the government best create high-paying jobs that will give young Spaniards the security and financial stability they need to gain independence and truly begin their adult lives?

Is vocational training a better alternative to traditional university education to combat high youth unemployment?

How should early school leavers be reintegrated into the national economy?

How should the Spanish government deal with the waves of skilled Spanish university graduates leaving the country in search of better employment opportunities?

Are high youth unemployment rates creating a “lost generation”? If so, how might this “lost generation” affect Spain far into the future?

People’s Party (PP)

The PP has a mainstream center-right affiliation and is a conservative, Catholic and economically liberal party. In 2012, the PP-led government introduced a vocational study program split between classroom and work experience aimed at 16 to 24-year-olds in an attempt to emulate the high-quality apprenticeships of Germany and Switzerland, where unemployment rates are among the lowest in Europe. However, a 2015 poll found that rejection of the PP is strongest among Spain’s younger generations; 58.2 percent of 18- to 24-year-olds said that “they would never vote for them”; and among 25- to 34-year-olds, that percentage rose to 64.2 percent.

Spanish Socialist Workers’ Party (PSOE)

The PSOE is a mainstream center-left political party that is connected to the General Union of Workers (UGT) trade union. Young and university-educated voters have begun to abandon the PSOE in favor of newer parties due to corruption within the party, austerity measures, and lack of visible progress in combating unemployment.

Podemos

Podemos is a leftist party that originated in 2014. It supports the exclusion and removal of the monarchy of Spain, as well as Spain’s withdrawal from NATO. The majority of youth support either Podemos or Ciudadanos, as they are both new parties on the political scene and promise to make changes to the existing political order that has failed to improve youth unemployment.

Ciudadanos

Ciudadanos is a center, business-driven party that argues for a high degree of political decentralization, but also rejects full freedom of communities to govern themselves. The majority of youth support either Podemos or Ciudadanos, as they are both new parties on the political scene and promise to make changes to the existing political order that has failed to improve youth unemployment.

Questions to Consider:

Based on your position, how will you convince young Spaniards that your party will be able to change the economic tide and reduce the high rates of youth unemployment?

What economic reforms can your position reasonably suggest to resolve high youth unemployment while staying in line with your party’s ideology?

For an in-depth academic explanation of the causes of and possible solutions for Spanish youth unemployment, see the following working paper https://www.bbvaresearch.com/KETD/fbin/mult/WP_1131_tcm348-270325.pdf

For a simplified guide to Spain’s economy during and after the financial crisis, with many helpful graphs and charts, see http://www.economicshelp.org/blog/5525/economics/spanish-economic-crisis-summary/

For ideas for solutions to high youth unemployment rates from the business side of the labor market, see http://www3.weforum.org/docs/Manpower_YouthEmploymentChallengeSolutions_2012.pdf

For a graph tracking the monthly youth unemployment rate in Spain and other EU countries, see https://www.statista.com/statistics/266228/youth-unemployment-rate-in-eu-countries/

For an explanation of the rise of Podemos and Ciudadanos in Spain’s most recent election, see this article http://www.worldpoliticsreview.com/articles/16552/upstart-parties-podemos-and-ciudadanos-redraw-spain-s-political-map