The Economic Crisis and Youth Unemployment in Spain

The Great Recession of 2008 has had a significant social impact on Spain, where the effects on the labour market caused by the change in the economic cycle have been more profound than in other European countries. The consequence has been a severe decline of employment and a marked rise in the unemployment rate, which by the end of 2011 had reached a figure of 23%: double the average for the European Union and the highest among the Euro member states.

Job losses have not been uniform for all age groups of the population, young people are being hardest hit. This has also been the case in the rest of Europe, although not to such a pronounced degree, confirming the general principle of “the last person hired the first to be laid off”.

The aim of this article is to carry out a brief analysis of this phenomenon, in a twofold dimension: firstly by looking at the evolution of the main labour indicators regarding young people in Spain since the onset of the current crisis; and secondly by analysing the key factors of the increased vulnerability of youth employment.

The article focuses in the period of 2008-2012, using data from the National Statistics Office [2]. It should be pointed out that in Spain the concept of youth – in terms both of labour statistics as of active employment policies – covers people from 16 to 29 years of age [3]. Nevertheless, in this analysis this group is divided into two sub-groups (16-24 and 25-29 year olds) in order to facilitate comparisons with other European countries.

Effects of crisis on youth labour market situation

Between 2008 and 2012, the overall number of jobs in Spain has dropped by 2.9 million. This process has affected mostly young people (16-29), accounting for a decline of 1.9 million jobs , which represents 66.7% of the total (table 1)

The main consequence of this process has been a drastic reduction in the number of young people in work and a huge increase in unemployment rates, particularly in those aged 16–24, amongst whom the figure for those out of work reached 52% by 2012 (table 2).

Nevertheless, if we compare the evolution of the ratio between unemployment in adults and young people, we can observe a slight decline in the 16 to 24 year group (diagram 1).

Graph 1. Ratio of youth/adult unemployment rates in Spain. 2008 and 2012 (%)

Data source: EPA (first quarters)

However, the explanation for this tendency does not lie – as some analysis  have suggested – in the greater effect of the crisis on the rate of adult unemployment but in the different evolution of the labour force. As such, whilst figures for those employed in the 16 to 24 age group have fallen by almost 9 points during this period, those for adults (25 to 64) have increased by 3 points, largely due to the notable increase in the number of women in the Spanish  labour market since the beginning of the crisis.

To sump up: the main consequence of this crisis for young people in Spain has been a sharp increase in unemployment. A situation that has taken dramatic proportions, especially considering the relevant growth in long-term unemployment figures during this period (44% for people aged 16-24 in 2012, and 45% for people aged 25-29).

Key factors of the increased vulnerability of youth employment in Spain

A more in depth analysis of the data allows to explain some key determinants of the higher vulnerability of youth employment to the crisis in Spain.

Firstly, it is important to highlight three factors associated with the characteristics of youth employment during the period of expansion registered by the Spanish economy from the mid-90s until 2007. On the one hand, there is the high sectoral specialization of youth employment in some of activities hardest hit by the crisis, such as construction – males – and retail sales and accommodation services (females). On the other hand, it is the significant concentration of young employees in low paid and low skilled jobs, which have been affected to a greater proportion since 2008. However, the most relevant factor is the high temporary employment rate of young people [4]. This is an element which has led to the creation of jobs for young people during periods of economic expansion, but has led to particular vulnerability in times of crisis, since it is precisely this kind of job which has been worst hit by economic hardship.

Secondly, attention should be drawn to two factors related to socio-demographic characteristics. On the one hand, the level of education, in the sense that the economic crisis has had a more negative effect on those with lower levels of education, which includes a high percentage of young people. On the other hand nationality, with higher vulnerability of foreign citizens, mainly among men (mostly employed in the construction sector).

Thirdly, it is important to point out the territorial dimension because although the crisis has affected the level of employment of young people throughout the country, its impact has not been the same in all the different regions. This can be explained mainly in terms of the regional differences in productive structures, so that the regions which had a higher level of specialisation in activities such as construction or associated industries, or services with low added value, have been particularly badly affected. There are also additional factors such as the level of regional debt or the different policies to deal with the crisis adopted by the various regional governments.

To conclude, the analysis confirms the higher vulnerability of youth employment to the crisis in Spain, due to the factors listed. Nevertheless, it is important to emphasise that – despite this general trends - young people are not a homogenous group, and face different situations according to their relation with economic activity, their level of education and training, or the different school to work transitions. As indicated recently by the International Labour Organisation, it is precisely this diversity which needs to be considered when designing policies targeted to young people [5].