Spain's debt to GDP ratio is 84%, €884.4 billion ($1.14 trillion).In an attempt to control this spiraling debt Spain's Government has been employing a contractionary fiscal policy. "In 2012 it tried to obey Brussels and Berlin, raising taxes and chopping spending on health, education, social services and almost everything else."
This has caused massive public anger, with GDP shrinking and unemployment at 26% a contractionary fiscal policy has been very controversial. Half of those under 25 are able to find jobs and in 2013 800,000 people lost their jobs. In 2013, unemployment will rise further as another half a million or more jobs are lost. A new labour law offers workers in companies with falling revenues either wage cuts, sackings or both.
Angry at the austerity measures Spaniards took to the streets in protest. Click here, here and here for more information.
Interestingly, Germany's unemployment rate is only 5.4% - what is Germany doing that Spain isn't? Find out here...
This has caused massive public anger, with GDP shrinking and unemployment at 26% a contractionary fiscal policy has been very controversial. Half of those under 25 are able to find jobs and in 2013 800,000 people lost their jobs. In 2013, unemployment will rise further as another half a million or more jobs are lost. A new labour law offers workers in companies with falling revenues either wage cuts, sackings or both.
Angry at the austerity measures Spaniards took to the streets in protest. Click here, here and here for more information.
Interestingly, Germany's unemployment rate is only 5.4% - what is Germany doing that Spain isn't? Find out here...
Firms may need subsidies to carry out these apprenticeships and with already poor finances, countries like Spain and Greece may find this model hard to replicate.
ReplyDeleteCould you not say that they dont need subsidies - it is a form of cost cutting - they can save money by employing apprentices?
DeleteIf they hire apprentices instead of qualified workers, they will not be operating as efficiently and as productive as possible.
DeleteThey may be willing to work for free even, people are desperate in these economies. Apprenticeships have extremely low wages in comparison the minimum wage
DeleteAusterity measures aren't working, the protests are correct and a change of tactic is needed. The recession won't get any lighter if government spending is not increased. However, it is hard to get out of austerity measures with the amount of debt these countries are in, and they just cannot afford to spend.
ReplyDeleteAusterity measures are not working, and is affecting the weakest people of the economy. Example is that Spaniards are becoming poorer,lower pensions, less public services. And having 800,000 Spaniards unemployed in 2012 worsens the situation
ReplyDeleteIn my opinion Austerity measures should be used in a boom and not when a country is going into a recession. This is a Keynesian view. As the economy grows the government should start to slowly decrease spending and allow for private firms to take up the slack. The UK (David Cameron) has chosen to cut spending in certain sectors in the hope that private firms provide what the government initially provided but this isn't working as the economy is still recovering from recession and business confidence is low.
ReplyDeleteSpain could subsidise university degrees with a 'sandwich year' in order to allow university students to gain the experience. This would potentially make them more employable and will give them the experience to compete with the older generation applying for jobs. Similarly, they could also subsidise apprenticeship opportunities as this appears to work well in Germany with the dual-education system.
ReplyDeleteHow can Spain borrow money, or more accurately, where from? Austerity is required but it needs to be widespread and affecting all sectors of society. Currently, as many in the videos state, it is disproportionately affecting people on low incomes and the middle-class, whilst the super-rich retain their lavish lifestyles and multinationals experience higher than ever-before profits. Spain risks a revolution from below...
ReplyDeleteInteresting point about how austerity has impacts different social/economics groups
DeleteIn rebuttal to your statement concerning borrowing, the question is not how spain can borrow, or even where the funds will come from, but instead that are the Spanish government willing to borrow at outrageously high interest rates? These interest rates will be high for any financing as investor confidence in the Spanish economy is low and banks or financial institutions will be unlikely to take on high risk loans for low interest returns. So in conclusion your statement is viable but fails to take into account whether Spain would be willing to accept such high interest rate loans in the first place.
DeleteThey cant be blamed as the government sees that cuts are the only option even though economic depression is a current side effect. The governments trying to solve the recession along with a huge debt, either decision has to be made over which has more priority; consenquences have to be faced either way.
ReplyDeleteAusterity measures during a recession is like kicking the economy whilst its down..
ReplyDeleteWhat other choices are there?
DeleteUnemployment is only the labour side of the problem. If you look at the problem from a budget deficit situation, unemployment is only a long-term issue. Reasons given for austerity measures in Spain were in response to a lack of liquidity for banks. Hence the government responded, like in many other nations, by offering liquidity injections in the form of bailouts.
ReplyDeleteAs such, looking at austerity measures just from an unemployment basis is biased, because this does not take into account the implications of a bank run or worse still liquidity failure across the economy. Failure to provide liquidity could have lead to a standstill in economic activity nationwide. This issue would not only have implications for lower income households/individuals but also for upper-classes individuals.
In conclusion, yes the level of unemployment is of concern for the economy, in the long run however a lack of liquidity and the availability of funds for entrepreneurs would lead to a of seize economic activity in the medium to short term. Without entrepreneurs willing and able to invest, the creation of jobs, in the medium to short term and perhaps also in the long run, would be slow, maybe even non-existence. As such the argument that only the lower class has been affected detrimentally is not as relevant as the relationship between the upper class individuals which is directly proportionate to the amount of jobs created, and finally the level of consumer spending.
Some really great work here year 12...you put the 13's to shame. Well done all!
ReplyDelete