unemployment

Rating agency Moody’s warns that Catalan independence from Spain might have “a major adverse impact on Spain’s economy” but also that “Catalonia itself could also suffer” if the break–up is not friendly. In a forecast about the Spanish economy published this week, the New York-based company analyses potential risks that might damage the expected economic recovery. Moody’s praise the high level of exports, based on a higher competitiveness reached by lowering salaries. However, the report, signed by Zach Witton, highlights that “debt reduction by households and businesses, elevated unemployment, the housing market correction, and tight credit will drag on growth”.

The “very moderate” growth expectations for 2014, between 0.5% and 1%, will make it “difficult” for the unemployment rates to fall below the current 27%. This was the conclusion of the 2014 Economic Report of Barcelona-based ESADE, one of the top business schools in the world. The main author of the report stressed that this “slow and costly” growth should contribute only in a “very reduced” way to creating new jobs in 2014. However, he also explained that the Labour Market Reform would have positive effects on employment levels in the medium and long term. The study indicates that consumption in 2014 will “remain restricted” due to the high unemployment rates and reduced wages.

Next to the Spanish Prime Minister Mariano Rajoy (who went to the White House), the President of the United States, Barack Obama, did not talk about Catalonia despite being asked about it directly by a journalist. Obama did not repeat the formula expressed by other international leaders – it is Spain’s internal matter – but instead preferred to avoid the issue. He did not explicitly back the Spanish PM, despite the fact that Rajoy had stated, only a few minutes earlier, that “Catalonia’s independence will not happen”. Rajoy’s meeting with Obama and the following press conference at the White House were also controversial because the Spanish Government banned several media that were covering the trip and only allowed one Catalan newspaper to attend it.

The President of the Catalan Government, Artur Mas, insisted this Tuesday he will organise a self-determination vote within the legal framework on the date agreed upon by four political groups 3 weeks ago. In a press conference following the first Cabinet Meeting of 2014, Mas ruled out the possibility of making changes in the government he chairs on the short-term, after speculations that the Catalan Left-Wing Independence Party (ERC) could sit in the Cabinet, formed by members from the Centre-Right Catalan Nationalist Coalition (CiU) and independents. In addition, he identified “a cross slope” in the economic, social and political context, referring to a slight recovery, after 6 “terrible and fearsome years”.

Catalonia has ended 2013 with 22,084 fewer unemployed people than in December 2012, with the total number amounting to 624,872 people, according to the Ministry of Employment and Social Security. The December figures also reveal that the total number of unemployed people has decreased between December 2012 and March 2013, a first since 2006. At monthly level, the number of unemployed people fell by 13,472 between November and December 2013. In the whole of Spain, the unemployment figures registered a drop, with 147,385 fewer people unemployed and the total number falling to 4,727, 814.

The Catalan Government wants energy companies not to cut off the domestic power supply to people in financial difficulties who are temporarily unable to pay their bills. The Catalan Ministry of Business and Employment aims to fight so-called ‘energy poverty’: people who are obliged to do without electricity or gas because they simply cannot afford the bills. In the current economic crisis, thousands of Catalan households (around 20%) are facing this problem, which means they cannot use the heating during winter or they have problems cooking meals. In order to achieve this objective, the Catalan Executive is looking at modifying Catalonia’s Consumption Code to include this initiative fighting ‘energy poverty’.

Speaking to the Economic Affairs Committee of the European Parliament, the European Commissioner for Employment, Lázló Andor, said that Spain should profit from its decentralised organisation to help fight youth unemployment. He suggested that the rest of Spain’s Autonomous Communities should follow the examples of Catalonia and Navarra to improve employment levels among youngsters. The European Commissioner said that Spanish authorities should take note of the plans launched by Catalonia and Navarra, where the youth unemployment situation “is better than the national average”. However, despite these levels being lower than in most of Spain, youth unemployment in Catalonia is worryingly high, at more than 53% in July.

The Catalan Government has presented its budget proposal for 2014, which posts a 1% deficit, representing a 35.5% annual reduction and amounting to €1.98 billion, in line with the 2014 deficit targets imposed by the Spanish Government. The budget prioritises healthcare, education and social policies, which represent 71% of the total non-financial spending. Non-financial spending grows by 0.2% and reaches €20.30 billion, while the total spending amounts to €29.31 billion. The Catalan Finance Minister stressed that spending had not been reduced this year since in the last 3 years it had already dropped by 22%. Budget cuts “have reached their limit”, as otherwise “social cohesion” and “the Welfare State” would “be at risk” he said. In 2014 the Catalan Executive will spend the same per inhabitant as it was doing in 2004 taking into account inflation (€1,901).The adjustment for 2014 focuses on increasing revenue by €3.2 billion, mostly through new taxes (€910 million) and the sales of assets and privatisations (€2.32 billion). On top of this, the Catalan Government forecasts a 0.9% economic growth for 2014, leaving behind the recession of 2012 (-1.2%) and 2013 (-1.1%).

The Catalan Government has forecasted a 0.9% economic growth for 2014 in its budget proposal for next year, leaving behind the recession of 2012 (-1.2%) and 2013 (-1.1%). The positive figures are mostly due to the strength of the export sector – which will continue to improve its results. The main factor slowing down growth will be the internal demand, which will continue to decrease although it will do so at a lower pace. In addition, the Catalan Executive believes the unemployment rate will decrease and reach 23.1% by the end of the year. It is expected 2013 will end with a 23.7% unemployment rate, higher than the 22.6% rate registered at the end of 2012.

However, in annual terms, Catalonia registered a fourth consecutive drop in unemployment figures with a 1.93 % decrease compared to October 2012 and 12,474 fewer jobseekers. By the end of October 2013, 633,832 people were registered as unemployed at the offices of the Catalan Public Employment Service (SOC), meaning a 2.08% increase since the month of September, with 12,921 extra people unemployed. These latest figures, which were released by the Spanish Ministry of Employment and Social Security, also indicate a third consecutive month of growth in unemployment. In the whole of Spain, registered unemployment also increased for the third consecutive month.

The President of the European Parliament, Martin Schulz, visited Barcelona on Thursday and met with the President of the Catalan Government, Artur Mas, and the Secretary General of the Catalan Socialist Party (PSC), Pere Navarro. Schulz, who is the Social-Democrat candidate in the next European Elections for the President of the European Commission, acknowledged that he talked about Catalonia’s self-determination process with Mas and Navarro. However, the German politician refused to take sides, saying he has “no solution” to offer and that “the problem” has to be solved between Catalonia and Spain, not at European level. Furthermore, he insisted that Catalonia’s independence should not be the issue in the next European elections. “I want to talk about youth unemployment”, he stressed.

In Catalonia, the unemployment rate decreased by 32,500 people to reach 22.84%. The Spanish Labour Force Survey has recorded two consecutive semesters of decrease in the unemployment figures after new highs had been reached in early 2013. Catalonia is currently leading the country in terms of unemployment reduction: on the Spanish Scale, the latest figures indicate a drop in 72,800 people while the rate is set at 25.98%.

The Barcelona-based nationalised Catalunya Banc has reached a first deal with unions on the announced mass lay-off. The deal includes voluntary redundancies instead of early retirements, and the possibility for 401 workers over 50 years old to leave the company. The agreement was reached in the early hours of Wednesday morning, after a long day of talks on Tuesday. Catalunya Banc runs the banking business of the nationalised savings bank CatalunyaCaixa, which will be sold in the coming months after a comprehensive restructuring process. Talks are still ongoing in order to close a definitive deal and the definitive agreement has now to be ratified by the bank’s Board.

At Spanish level, unemployment increased both in monthly and annual terms. Catalonia is the Autonomous Community with the largest annual unemployment drop in absolute terms and the second highest in relative terms. The number of people registered as unemployed in Catalonia at the end of September dropped by 11,546 individuals compared to figures from a year ago, representing a 1.83% annual decrease. However, in monthly terms, registered unemployment increased by 1.51%, with 9,243 more jobseekers. September is a month with a traditional unemployment increase due to the end of summer season contracts. Last September’s unemployment increase was the lowest since 2008.

Nils Schmid, Vice President of Baden-Württemberg and regional Minister for Finance and the Economy, said in an exclusive interview with the CNA that Catalans are the ones who have to decide whether they want to remain within Spain or to become independent. This process should “of course […] be based on a referendum”. The Leader of the Social-Democrats (SPD) in this state also added that his party is proposing to include the possibility of holding referendums at national level in Germany, which is currently not envisaged by the German Constitution. However, he “cannot imagine” an independence referendum for Baden-Württemberg. On other issues, Schmid pointed out that “fiscal consolidation is not enough” and has to come with “structural reforms” and policies to stimulate growth. He also welcomed Catalans who are going to Germany to find job opportunities.