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Spanish youth unemployment at highest in Europe

People wait in line at a government employment office in the center of Madrid. Spain's unemployment rate rose to 20.05 percent in the first quarter, from 18.83 percent in the fourth quarter of 2009, the national statistics office INE said. The number of jobless soared 286,200 in the three months to March over the previous quarter to reach 4,612,700 people, it said in a statement.

TEXT OF STORY

Tess Vigeland: Spain has been on a collection binge lately, collecting sports trophies. A Spaniard won Wimbledon, and the Spanish team won the World Cup. But it's also been collecting a whole lot of national debt, leading to a fractured economy. And kids are paying a big share of the price. Spain now holds the worst record in Europe for youth employment.

From Madrid, our European bureau chief Stephen Beard reports.


Spaniards celebrating the World Cup victory with cheers and horns

Stephen Beard: Spain celebrates victory this week in the soccer World Cup. Young men on the national team made the nation proud. Meanwhile, many other young Spaniards are suffering the misery of Spain's biggest failure.

Woman 1: I finished the university two years ago. I haven't found a job. I'm graduate. I have a Masters. I can speak English and French, and I can't find a job. I can't.

Millions of young Spaniards like her are unemployed. 40 percent of 16-to-24-year-olds -- 40 percent! -- are out of work. Many of them, like Esther Delcastillo Alvarez, are well educated.

Esther Delcastillo Alvarez: My situation is the same as many people of my age who have done degrees. They have spent time working abroad, trying to get extra experience and languages, and we can't find work. It's upsetting. It's terrible.

Esther who has a degree in communications has been looking for a job for two years. She's now on a government scheme, receiving a grant of around $1,200 a month. Not enough for an independent existence in Madrid, and the grants ends in six months.

Alvarez: I live with my parents. When my grants run out, I don't know what will happen. Do I feel betrayed? Yes, totally. I'm 28 years old and completely disillusioned.

Esther is a casualty of Spain's dual labour market -- the stark divide between permanent and temporary employees. Two-thirds of Spanish workers are classed as permanent. It's very expensive to fire them. They can get up to four years' pay. So employers hang on to them, even in the deepest downturn. New jobseekers don't get a look in. And the one-third on temporary contracts are highly vulnerable.

Monica Decarvaiho worked as a nurse here in Spain for eight years on a series of short-term contracts, some lasting less than a month.

Monica Decarvaiho: You never know when you are going to be working, when you are going stop working. And you can't plan long term. You can't buy a flat. You can't buy, things because you don't when you're going to finish.

Monica is on a visit to Madrid. She now lives and works as a nurse in Britain.

Beard: Do you think you will ever come back and live in Spain?

Decarvaiho: I don't think so. I think I will work there, and I will come here to visit the country. Because the working situation day after day is easier there, there's more hope there.

Beard: In Britain?

Decarvaiho: Yeah. I think so.

Under pressure from its European partners, Spain has begun loosening its rigid labour code. It's passed a law making it cheaper to fire permanent workers. Easier to fire, easier to hire -- that's the thinking. But even some of the victims of the current system, like Esther Delcastillo Alvarez, don't entirely buy the new approach

Alvarez: I don't know whether making it cheaper to fire people really make the situation any better. Because I ask myself, if so many people are being fired and losing their jobs, wouldn't making it easier to fire people make the situation even worse?

Many ask the same question. Gayle Allard, professor of economics at the IE Business School in Madrid, says there's not a huge appetite for reform.

Gayle Allard: The people on the outside just want to get inside. So they really don't want to dismantle the system. They also want to be paid four years' of salary if they're dismissed. So there's tremendous resistance to change.

Strikers shouting.

Labour unions mounted this protest against the labour reform. They're planning an even bigger action in September, a general strike. Spain seems set to keep its unenviable record for the worst youth unemployment in the western world.

In Madrid, I'm Stephen Beard for Marketplace Money.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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