June 10, 2013 | Contribution by
By Nuria Rodriguez-Planas, Visiting Research Fellow, IZA
May Day demonstration 2012, Barcelona. 05-02-12 © Matthias Oesterle
In the first quarter of 2013, Spain had the highest unemployment rate in the European Union, at 27 percent, along with Greece. For youth, the situation was even worse, at over 50 percent. It's a dramatic turnaround from early 2008, when overall unemployment was around 8 percent. But that was before the recession set in and the real estate bubble burst, battering the construction industry.
The JKP recently spoke with Nuria Rodriguez-Planas, a Visiting Research Fellow at Germany's Institute of Labor (IZA), about how Spain's labor market has evolved. She explains that the the reason for these large unemployment shifts is the highly segmented labor market, which developed during the late 1980s and has characterized the Spanish labor market since the early 1990s with one-third to one-quarter of all wage and salary earners on fixed-term, rather than permanent (with benefits), contracts — and unlike in Germany, fixed-term isn't a stepping stone to permanent. Where will future jobs come from? She says it’s unclear because there isn’t much investment, although tourism is doing quite well and could absorb some of the low-skilled workers.