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 Collado is still working in a country where more than one in four
out of a 22.7 million workforce have no job. But her employment does
her, and Spain, few favors in the long term.
"I've had to turn the heating off this winter. I can't afford to go
out with friends, and I'm ashamed to say I have turned to my own
mother, who is 91, to help pay for gasoline and car insurance," says
the tough, fair-haired laborer.
New laws giving companies more flexibility to cut salaries and
change contract terms for employees have helped Spain pull itself
back from the brink of default two years ago, restarting export
growth by letting companies push down prices.
But the shift in labor rules, promoted by the European Union as part
of economic changes asked of the euro area's more indebted nations,
has also transformed Spanish society, with long term consequences
that could undermine the recovery.
Workers on low-wage, short-term contracts have borne the brunt of
the salary reductions, creating a new underclass of Spaniards who
are likely to struggle for the rest of their lives to find stable
employment.
According to the International Monetary Fund, wage inequality rose
faster in Spain than in any other EU country from 2007 to 2012, a
divide that has escalated social tensions in a country that had only
recently healed the wounds of a 36-year dictatorship ended in 1975.
A recent poll indicated support for Spain's two leading parties
would fall sharply at the upcoming European elections, often
considered a protest vote, in favor of much smaller groups, due
largely to their handling of the economic crisis.
As voter confidence in the main parties dwindles, the conservatives
could lose their absolute parliamentary majority in next year's
national election, making it harder to pass still vital reforms
through a divided legislature.
SPENDING MATTERS
Despite clear signs of recovery, with output expected to grow around
1 percent this year after having shrunk around 7 percent since the
crisis began, Spain's path to long-term prosperity is likely to be
steep, economists say.
Though exports have swelled to one-third of Spain's overall output,
up from 20 percent five years ago, the country's economic health is
heavily reliant on household spending, which has shrunk in the same
period.
That means Spain will struggle to follow in the footsteps of
Germany, whose labor market reforms of the 1990s transformed it into
an economic powerhouse fueled by higher-end exports rather than
domestic consumption.
Economists also question whether the cheaper, basic goods that have
boosted Spain's export sector can in the long-term compete with
rival products in even lower-cost countries such as Turkey or
Morocco.
"The way out for Spain is going to be painful and, overall in the
short run, Spain is going to be a poorer country," says Santiago
Carbo Valverde, economist at Bangor University in Wales.
Household spending, a major pillar for a service-orientated economy
like Spain, has shrunk by more than 11 percent since the burst of
the property bubble six years ago. While the speed of the
contraction is easing, much lower wages mean a return to sustainable
growth could take years.
Trying to improve competitiveness by lowering wage bills was
counterproductive in Spain, Klaus Armingeon, political scientist at
Bern University in Switzerland, said.
"Cutting wages hurts domestic consumption, which affects growth.
Lower growth will force the government to pass more austerity
measures to meet fiscal targets, creating a vicious cycle."
ACTIVE POOR
The collapse of the real estate sector in 2007 and 2008 after a
decade-long property bubble sent the Iberian country into a downward
spiral. Households and companies were left deeply indebted; the
state was starved of lucrative real estate taxes and companies fired
people en masse.
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Nearly one-third of jobless people among the euro zone's 17
countries are in Spain. At one point, concerns over the public
sector deficit and banks in the bloc's fourth largest economy
threatened the stability of the entire single currency. Pushed by
its international partners, Spain undertook reform. Both
conservative and center-left governments approved changes aimed at
creating more employment, in part by making it easier and cheaper
for struggling companies to replace workers.
The number of people on low-paid, short-term contracts has soared.
By the end of last year, 16.3 percent of those with jobs were
working part-time, up from 11.1 percent in mid-2007.
Teresa Cavero, a researcher for international aid agency Oxfam in
Spain, says the result has been an increase in the number of
so-called active poor.
"These are people who are in work, but with very insecure jobs and
very low wages," she said. The percentage of workers at risk of
poverty jumped by almost 18 percent from 2007 to 2012, according to
Spain's National Statistics Institute.
"It's good that there is work, yes, but at what cost?" Cavero said.
STRETCHED
With around 6 million people without a job, Spaniards are jumping
at any chance of employment.
When Swedish furniture retailer Ikea announced it was opening a new
store outside Valencia and would need 400 employees, more than
20,000 applied within days of the posting, crashing its computer
servers.
Marina Fuentes, a 57-year-old Spaniard who has been cleaning Madrid
health clinics for 34 years, was forced to take a cut in salary last
year.
Now, Fuentes' 800-euro-a-month salary is helping support Fuentes'
unemployed daughter, son-in-law, granddaughter and nephew who are
living in a two-bedroom flat. When her daughter asked a social
worker for advice on what to do, she was told she should move back
in with her mother.
"I could get to the end of the week before; now I'm lucky if I reach
Wednesday," says Fuentes, who says she's trying to buy and cook in
bulk and freezing in order to save money.
Jobs that were previously shunned are now hot property.
Daniel Gismero, a 34-year-old street sweeper in Madrid, is part of a
union that successfully fought to avoid a 40 percent pay cut at the
private company that is contracted by the city government to clean
the Spanish capital.
Their bargaining chip was weeks of strikes which left piles of trash
on every corner of the city. He says the company is inundated with
job seekers.
Gismero takes home 1,100 euros a month and has agreed to a pay
freeze and a reduced salary for six weeks of the year until 2017 to
avoid more damaging pay cuts.
"Before, nobody wanted my job," he said. "It was always seen as a
shit job with shit pay. I feel like one of the privileged ones now."
(Editing by Alessandra Galloni and Philippa Fletcher)
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