Why is Spain having such a bad crisis compared to the rest of Europe? The answers lie in the details. That is details that don’t exactly show up in news reports and you have to either be in Spain or to know people there to ask for their opinion and get a better idea of what is happening.
First problem is the housing markets. Spain was going through a boom where a lot of investment money went into housing developments all over Spain. Right now 100 out of 5000 towns are on the verge of being completely deserted that is how bad the problem is right now. Around Spain you’ll find plenty of buildings that have just stopped construction completely and are just left as shells doing nothing.
Spain has a strange 25% unemployment rate which is the worst in europe, why is that? It has to do with the rights of the worker and unions that protect the worker at the expense of companies. Even car manufacturers don’t want to be located in Spain. Taxes are high enough and it is difficult to fire workers if they are not performing and if they have been with the company for a long time say 20 or 30 years, getting rid of a worker is nearly impossible and costs the company. Some small businesses are just crippled by this. There are some workers that don’t care if they get fired now because if they get let go they know they can rely on ‘paro’ to get paid while working. While getting this money they can even leave the country and spend it somewhere else. With a setup like this in Spain, it causes more jobs to be done under the table creating a black economy meaning more tax money is not going to the government. Corporations have many options on where to base headquarters and develop their teams and Spain is usually the last choice amongst this group.
Spanish banks on the verge of collapse. Too many Spanish banks are just not stable enough and it seems like Spain might need a bailout to get out of this mess.
Add this all up and you have a recipe for disaster. The people don’t want their worker benefits taken away while companies can’t afford to stay in business and more companies disappear leading to even more lost jobs and higher unemployment. With the Rajoy government in place promising tough measures to cut back everything from arts, sports, education and health, the people will go to the streets to protest the government that the people voted in.