Shuffle the cards

As the legislature advances, Mariano Rajoy is gradually shifting his rhetoric away from austerity, in the direction of the creation of jobs. First, however, he will have to attain the intermediate objective of generating financing for companies, especially the small and midsized firms that account for 90 percent of the labor force in Spain — as the Economy Minister Luis de Guindos explained last week in Rome, during a frustrating summit on youth unemployment.

Statistics do not support this rhetoric of good intentions. In the last four years, self-employed people and small businesses in Spain have seen a drought of small loans (i.e., those under 30,000 euros). According to the small- and medium-sized business employers association CEPYME, only three out of 10 credit applications are being accepted by private banks; in the nationalized ones (in spite of the government's talk of these spearheading the granting of credit, a pretension frowned on by the Bank of Spain) only two out of 10 are accepted. We have also seen a plunge in loans granted by the Official Credit Institute (ICO), which, while receiving the same budget as last year — 22 million euros — has been processing far fewer loans on behalf of the banks, which handle them and accept the risk of default. Concretely, 70 percent fewer in the first quarter of 2013, with respect to the same period last year. All these figures are taken from the Cadena SER radio program Hoy por hoy.

A poor time to make promises with nothing tangible to support them. But there are more depressing figures. Almost unnoticed, the National Statistics Institute (INE)'s quarterly survey on labor costs reveals that wage costs per worker per month (factoring in bonuses, overtime, back pay and other extras) is still falling. Non-wage costs, especially obligatory contributions into the Social Security system, are also diminishing. On this occasion, the INE has adjusted the percentages for seasonal factors; thus, the labor cost per worker has shrunk by 1.1 percent on an annual basis, while the labor cost per effective hour has fallen by 0.4 percent.

If to this we add the jobless figures, and the fact that unemployment is hitting the principal household providers (those who earn the biggest salary) especially hard, we have to admit that a tremendous internal devaluation is taking place among a majority of the population.

Light at the end of the tunnel?

This is why there is such a gulf between the official line and what people feel. While Rajoy optimistically repeats that there is "light at the end of the tunnel we are going through," the average citizen's expectations are dashed again and again, since there is little hope for short-term changes in the economy's performance. Meanwhile, the unending litany of corruption cases has a depressing and wearying effect on the public. The psychological wellbeing of the average Spanish household seems to have touched bottom, which also has adverse repercussions on consumer habits. The devaluation we have attained in terms of wages and unemployment seems difficult to repeat and sustain through longer periods of time — hence the shift in the tone of official statements.

The next question is what, exactly, is meant by recovery, and by light at the end of the tunnel. In fact what they seem to be talking about is that the former L-shaped exit from the crisis (in which the horizontal stroke extends indefinitely) is to be substituted by a U-shaped exit, in which the mystery consists in guessing how long we are going to remain in the horizontal trough of the letter. That is, whether the letter is narrow or wide. As Cervantes said in Don Quixote, "patience, and shuffle the cards."