Over at the New Republic, Jonathan Blitzer files a harrowing report on the dire situation of Spain’s youth. The country is experiencing 25 percent unemployment—with youth unemployment twice that number. The reason? An economic system constructed by government and unions that perversely incentivizes against hiring and retaining young people:
The peculiarities of the Spanish labor market are at the very crux of the youth unemployment problem, says economist Carlos Sebastián, a professor of economic analysis at Madrid’s Complutense University. Indeed, it is impossible to understand the generational rift at the heart of contemporary Spain without examining the traditional strength of Spain’s unions, and the raft of perverse incentives that it encouraged, for employees and employers alike.
In the late 1970s, in the heady early days of Spanish democracy, the country’s parties made a concerted effort to show their affinity with the working classes; in practice, this meant accommodating unwieldy union demands. When a recession hit in the 1980s, one of the few ways the government could combat unemployment without cutting into existing labor prerogatives was to create “temporary contracts.” These were designed to make it easier for businesses to hire young people (as well as immigrants). But since it paid out fewer benefits, it also made it cheaper for businesses to shed these workers when the going got tough.
The recipients of these temporary contracts—ie: the occupants of the Spanish labor market’s lower rung—have always been the country’s youth. There is thus a steep drop-off in how Spain’s older and younger generations have been trained to think of their economic prospects. In talking to Spaniards in their twenties and thirties, it is routine to meet people, regardless of their background, who describe being hired for a year or two, then fired, and rehired several months later. It’s also rare to find anyone in her twenties or thirties who has had, or knows someone who has worked under, anything other than temporary contracts.
We would be wise to learn from Spain’s plight before it’s too late. America has its own intergenerational reckoning on the horizon, and unless elected officials act to rebalance our failing blue model priorities, young people in this country could end up just like Spain’s: unemployed, in debt, and without prospects.