An emergency plan

The surge in unemployment in the first quarter of this year, with 6,202,700 million people out of a job in Spain, puts the government in a critical position. It is not just the magnitude of the statistics, which are alarming and disheartening — 237,400 more people found themselves out of work this year, with 1.9 million households without any member currently employed, and a 57-percent jobless rate among young people. At some point, and hopefully soon, the government will have to admit that its economic policy, which has been unable to stop a worsening recession and the main problem associated with it, unemployment, is a complete failure. Unemployment has torn apart social cohesion; stopped the recovery of consumption and investment; destroyed stability (more than 384,500 permanent jobs have vanished in the past 12 months); and caused a phenomena, unknown until now, of household regroupings, where thousands of people have returned to live with their parents or grandparents to avoid falling into poverty. In this latest category, more than 15,000 households have broken up in the first quarter and more than 25,000 in the previous period.

This is the reality the government is facing. But the longer it waits in accepting the fact that its policies are a failure, the more probable it will be that the situation will blow up in its face. Admitting this means that it recognizes that unemployment is a tragedy that cannot magically go away in the upcoming quarters because of the effects of the reforms adopted — some misguided, some incomplete and others that have aggravated the situation. The Rajoy administration has sufficient capacity of foresight to know that in the coming quarters there will be more job losses because industry is in full decline, construction has nearly come to a halt, and rallies in certain job markets, such as the food, beverage and tourism sectors, are seasonal.

The government insists that its policies are working, and it has cited wrong arguments to back this up. It is the recession itself and not the government’s policies that explain the improvement in the trade balance. The government also exudes puerile confidence in the narrowing of the risk premium, an obvious factor in reducing public borrowing costs, but one which is subject to external factors over which it has no control.

Indirect policies that try first to stabilize debt costs to win market confidence can work during phases of conventional recession and in countries that do not have one-quarter of the working population out of work. But this economic situation is exceptional. If direct decisions concerning the job market are not taken and policies for job creation in the public and private sectors are not introduced, then we are quickly headed for a complete collapse.

For this reason, the economic decisions that will be adopted in the coming days are crucial. If the package of measures that was announced on Friday is only aimed at introducing mistaken or imprecise deregulations and liberalizing markets in the medium term, the recession will continue next year and an explosion of more social conflict lies on the horizon.