Two days ago, my host mother’s closest friend, Almudena, was laid off. She had anticipated the layoff, and she knew that the majority of the other employees would be dismissed as well as the ownership of the company transitioned. What Almudena had not anticipated, however, was the job offer she received from the company taking over her own: the opportunity to do what amounted to the same job for slightly more than half of her current salary. Despite 18 years of experience in the hotel industry, her compensation would be that of an entry-level employee.
What shocked me the most about the situation was not the offer, but the fact that it merited consideration. However, in the context of Spain’s enduring economic crisis, it is not so surprising. Almudena knew that, if she did not accept the offer, her alternative was unemployment. With an unemployment rate that has been greater than 20 percent for more than three years, jobs are exceedingly hard to come by. The current unemployment rate hovers around 26 percent, and it is almost unbelievably difficult to enter the labor force. In fact, the youth unemployment rate is over 50 percent. Those who are employed are largely those who have had their jobs for years, not those newly searching for employment. Such job scarcity leaves workers with very little power; they are often forced to accept a drastic salary reduction or face unemployment.
This is not to say that life is terrible for most Spaniards. Spaniards benefit from a wide range of social services, including an excellent public healthcare system and high quality public university education for approximately 3,000 dollars annually. Unemployed individuals, providing that they have worked several years, receive compensation equal to 70 percent of their salary for six months, and then 60 percent thereafter, for a total of up to 2 years. In this context, Almudena’s decision to reject the employment offer makes a good deal of sense. Not only would she receive little more compensation working than she would not, but she would also have significantly reduced unemployment benefits if she were subsequently laid off from her new position. Many others have encountered similar situations as management has changed hands and have arrived at the same conclusion that Almudena did.
It certainly seems to be a good thing that those who are unemployed can live fairly comfortably, since alternatives to unemployment (also known as adequate jobs) are so limited. However, El Paro may also be problematic. Because of the generous unemployment compensation and highly subsidized public services, many people do not expend much effort searching for a job until the end of the first two years that they are unemployed. Some even see the benefits from El Paro as vacation days that they have earned from their years with a company.
That said, it’s difficult to determine whether limiting these benefits somewhat would actually lower the unemployment rate. It might be the case that people would work harder to find jobs and be willing to accept lower compensation, but it is not necessarily the case that most would succeed in their job search. A story in the Guardian cogently demonstrated how difficult it is to find a job in Spain in an article stating that a new IKEA furniture store received 20,000 applicants for 400 jobs. It seems that lowering unemployment benefits would do little to change this dearth of unemployment opportunities, unless these funds could be somehow repurposed to create jobs. For now it seems that, in the words of my host mother, the primary problem is “No hay trabajo”—that there are no jobs.