A country on a tightrope: the economic crisis and the end of an era in Spanish politics.

• Author: Garcia, Oscar J. Martin
• Position: Essay

After the years Spain's Transition to democracy in the late 1970s, this country is standing at its second major historical crossroads in less than half a century. Following a period of incredible prosperity between 1991 and 2007, the country is currently experiencing the worst economic situation since the "hunger years" following the Civil War in the late 1930s. What is more, the political system's inability to correct flaws in the market has increased Spanish citizens mistrust in their democracy.

Three factors explain the interrelation between the economic and political crisis currently plaguing Spain. First, an increasing number of citizens believe that neither the economy is under control nor is Spanish democracy. Second, the negative distributive effects of austerity policies have deepened social inequality and destroyed the social consensus on which the Transition to democracy was based. Third, the economic measures adopted to curtail the impoverishment of the middle and lower classes have been totally ineffective. However, such measures are still in place despite popular rejection, prolonging the negative effects on employment, welfare, social protection, and other essential social issues.

Crisis, Unemployment, and Inequality

The Spanish economy, once one of Europe's healthiest, went into a tailspin in 2008, as the international financial crisis contributed to the collapse of its key construction sector. After the housing bubble "burst, the main consequences have been: 1) the shrinkage of the fourth-biggest Eurozone economy, whose GDP fell by 16% between 2007 and 2012, and 2) the unstoppable increase of the country's unemployment rate. According to the National Statistics Institute (NSI), at the end of 2012 the unemployment rate exceeded 25% for the first time in Spain's history. Yet, the elimination of jobs has not ceased since then. Unemployment hit 27.2% during the first quarter of 2013. Today, there are around 6.2 million unemployed, a number which, according to The Guardian, brings to mind the figures reached by "the near-feudal agrarian state the country used to be" during the darkest years of the Franco regime. (1)

In mid 2007, Spain reached its highest ever employment levels thanks to the "building boom." They were happy years during which the country created some 750,000 jobs per year and the "Spanish miracle" even became a model of economic success for the rest of the EU. Since then, however, over 3.2 million workers have lost their jobs. Between 2007 and 2013, unemployment in Spain increased by over 19 percentage points, while a series of harsh labour reforms and cutbacks in social spending have done nothing to reverse the situation. Furthermore, since Spain climbed on the bandwagon of austerity in May 2010, over 1.5 millions Spaniards have lost their jobs. These official figures mean Spain's jobless rate is twice the European Union average. In February 2013, Eurostat recorded the highest unemployment rates among EU-27 members in Greece (26.4%) and Spain (26.3%). The high number of young people without a job is particularly worrying. The rate of 16-24 year old Spaniards without work has jumped to just over 57%, the highest level, together with Greece, in the industrialised world. (2)

This "lost generation," the best educated yet least hopeful since the advent of democracy in Spain, will have little choice but to leave the country to find work. But this is just one single example of the social drama caused by the neoliberal measures encouraged by Brussels. Despite promises from national and European leaders that reducing deficits would spur growth, the massive spending cuts are leaving thousands of Spaniards on the brink of exclusion. Among them, there are 2.2 million children living in poverty according to organisations such as UNICEF, Save the Children, and the Red Cross. It is a disturbing reality, which could potentially have dramatic consequences in the not-too-distant future. Nearly 2 million unemployed workers are no longer entitled to unemployment benefits, while all the members of some 10% of households (approximately 380,000 families) are now out of work. It is hardly surprising that Eurostat figures released in April 2013 showed that only Bulgaria and Romania had a higher percentage of people deemed at risk of poverty. (3)

Previously, in September 2012, The New York Times (NYT) published a devastating report entitled "In Spain: Austerity and Hunger." It is certainly true that the combined effects of unemployment, wage cuts and the dismantling of the welfare state have left 11 million Spaniards in poverty. What is more, Oxfam has warned that if the current austerity measures are maintained, "by 2022, some 18 million Spaniards, or 38% of the population, could be in poverty." Meanwhile, the social gap between rich and poor is constantly widening. Together with Portugal, Bulgaria, and Latvia, Spain is the country with the highest levels of inequality. Between 2007 and 2013, the gap between the richest 20% and the poorest 20% grew by 30%. In the words of the Red Cross, Spain is dangerously "moving towards a two-tier society" of rich and poor. (4)

Institutional Paralysis and Corruption

However, Spain's troubles are not limited to a deep, lasting economic depression. Instead, the problems involve a systemic failure: a moral, cultural, and political crisis that threatens to destroy the solid political model which was crafted after 40 years of harsh dictatorship. It is the third time in less than a century that...