Spain's Economy on a Troubling Road
Spain’s Labor Ministry recently reported that the number of people filing for unemployment benefits fell by 0.63% since May. While this might seem like good news, it is not. An estimated 30,113 people have simply stopped trying to find a job. The country’s unemployment rate of 24.3% is the highest in Europe. A new conservative government is trying to battle the rough economic times by employing a variety of labor market reforms. Some of the legislature has included a reduction in severance pay and the banning of increases in salary to match inflation. Spain's new measures for reducing the unemployment rate and debt levels are highly unpopular with unions.
But the public labor sector seems to be the least of Spain’s worries. According to a survey conducted by Markit, the Eurozone’s manufacturing purchasing managers’ index fell from 45.9 to 45.1 while Spain scored 42, the lowest in the trade bloc. Any score below 50.0 means that the manufacturing sector is contracting. The downturn for this industry has apparently been spreading to the peripheral nations of France and Germany, whose private firms have cut jobs and reduced pay.
With no solid political and monetary consensus, many European governments are struggling to tackle the economic problems. Only with a collaborated front can they fight the rapid decline in all financial sectors, be it public or private. Hopefully, the European Central Bank’s meeting to discuss interest rates will prove effective in reducing economic woes.