Spain unemployment figure had hit up to 5 million people mark in the last quarter of 2011. The National Statistic Institute measure from 4.9 million in the third quarter to 5.3 million people is jobless at the end of December. This rate rose from 21.5% in the third quarter to 22.8%, one of the highest rates in nearly 17 years. Spain has already hit one of the highest rates in the 17-nation eurozone and is expected to step back to recession. This impact hit hard on 16-24 year-olds Spanish went out of job from 45.8% to now 48.6%. Now, Spain government is trying to improve the jobs market.
In this chart it had shown the Real GDP of Spain from 2001 to 2012 but we are going to discuss for the last five years from 2008 and till now 2012. What is GDP? In ( Parkin,2012 ), GDP or gross domestic product, is the market value of the final goods and services produced within a country in a given period. In 2008, Spain Real GDP was about 0.9% it seem like after 2007 it start to decline. In 2009, it had decline to negative 3.7% compare within these five years 2009 it will be the lowest GDP growth year. In 2010, although the GDP growth had increase 3.6 % but it stills a negative 1%. In 2011, the growth is increasing slowly at about 7% but in 2012 it had fall back to negative 1.8% and it rank second lowest growth.
Types of unemployment
In unemployment, it can classify into three types which are frictional unemployment, structural unemployment and lastly cyclical unemployment. Frictional unemployment is unemployment that arises from normal labour market turnover. The creation and destruction of jobs requires that unemployed workers search for new jobs. Increase in the number of people entering and re-entering the labour force and increase in unemployment benefits raise frictional unemployment. Frictional unemployment is a permanent and healthy phenomenon of a growing economy. Structural unemployment in unemployment created by changes in technology and foreign competition that change the skills needed to perform jobs or the locations of jobs. Structural unemployment lasts longer than frictional unemployment. Cyclical unemployment is the higher than normal. Unemployment at a business cycle trough and lower than normal unemployment at a business cycle peak. A worker lay off because the economy is in a recession and is then rehired when the expansion begins experiences cycle unemployment.
The source is from Social Europe Journal URL: http://www.social-europe.eu/2012/06/the-economic-crisis-and-youth-unemployment-in-spain
Now, Spain is facing frictional unemployment and cyclical unemployment. From this chat above it had clearly shown that age from 16-24 year face e highest unemployment rate of 52% in 2012. That means this group of young adult either they are graduate cannot find any job or they are terminate by company due to they are young low skill and lack of experience. This group of people belong to frictional unemployment. During recession age group from 16-29 years unemployment rate had a sharp rise from 15.6% in 2008 to 39.6% in 2012, during this cycle it fluctuated a business cycle trough and lower than normal unemployment at a business cycle peak.
Impact on the society and economy of high unemployment
However, long term unemployment has been shown to lead not only financial hardship, poverty, dept, homelessness and crime but also several other often impact such as family tension and breakdown, social isolated, loss of confident and self-esteem and feeling of shame and stigma which all lead to the erosion of a healthy society. Furthermore, if young adult are consistently unemployed they may never learn marketable skill or the ones they have obtained through their education may become obsolete.
Nevertheless, the impact on the economy was also affected badly not only increase benefit payment and lost income-tax revenues. Relying on GDP growth rate to assess economic health but unemployment was so high and goods and services produce lesser and government have to spend more on the benefit and yet they can’t receive much income-tax. So government got to borrow money from banks to satisfy the needs and this will lead to deficit.
Measures used to solve unemployment problems
In conclusion, government have to solve unemployment problem by expansionary fiscal policy. Unemployment can be reduce by government spending , if government increase its spending of taxpayer money with the goal of increasing the demand of labour goods and services. This result in a temporary increase in output and temporary decrease in unemployment. When unemployment decreases, more people are able to buy goods and service, which in turn stimulates the economy and creates more jobs opportunities are created by producers and suppliers. Another way is to lower income tax on households and firms. Reducing taxes encourages producers to make more goods, invest more money, and people to work more since they retain of their earnings. If all these measures taken seriously, aggregate demand will increase and real GDP will also increase back to potential GDP. Without solving high unemployment problem the impact on society and economy will still remain the same, if this situation stay prolong the one who suffers the most are the entire citizen.
BBC News – Spain’s unemployment total passes five million. (2012, January 27). BBC – Homepage. Retrieved from http://www.bbc.co.uk/news/world-16754600
Parkin, M. (2012). economics (10th ed.). united states: addison-wesley.
Rocha, F. (2012, June 4). The Economic Crisis and Youth Unemployment in Spain — Social Europe Journal. Social Europe Journal – Europe, politics, economics, globalization, political economy, and international relations. Retrieved from http://www.social-europe.eu/2012/06/the-economic-crisis-and-youth-unemployment-in-spain/
Spain GDP Data & Country Report | Global Finance. (n.d.). Global Finance – The Best Banks | 192 Country Reports | GDP Data. Retrieved from http://www.gfmag.com/gdp-data-country-reports/175-spain-gdp-country-report.html#axzz28CObvfpk