The Pain in Spain – civil servants now lose jobs

With 24% unemployment and approximately 50% of those under 25 without a job, can it get much worse for the Spanish economy. Well it just has – Standard & Poors have downgraded Spain by two levels to BBB+ from A, with a negative outlook and this has “direct negative rating implications”. However the latest trend is for public-sector workers to lose their jobs with 32,000 government employees being made redundant in the first quarter of this year. When they lose their jobs they receive unemployment benefit for up to two years. When that runs out, the central government has been giving for the past several years a monthly subsidy of €400 ($530) to people who still haven’t found jobs. Most laid-off workers cut down on consumption, so they aren’t spending on goods and services to help stimulate the economy or fill tax coffers. But the dilemma is if they don’t bring in austerity measures they won’t get bailed out by their European colleagues – balanced budget v growth in the economy.

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