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Doubting Spain's recovery

Guy Hedgecoe, MadridAugust 24, 2014

The Spanish government hails new data showing growth and a drop in unemployment. But for many people, the economic crisis which lasted over half a decade continues to bite.

Daisy Silva
Image: DW/G. Hedgecoe

In Madrid's working class district of Vallecas, 60 people are gathered in the Luis Peiro cultural center, a small municipal building. It's an uncomfortable way to spend two hours on a sweltering August evening, but many of those present are desperate, because they are in danger of losing their homes.

This is a support group for people who face eviction because they are unable to pay their mortgage.

"We're still seeing lots of evictions. The only thing that seems to stop them are the actions we activists take," says Daisy Silva (photo, above), a 45-year-old single mother from Ecuador. During the support group she and a colleague listened to the harrowing stories of those present and offered advice on how to deal with banks and the authorities.

Silva herself has been unemployed for three years. She is still living in her apartment while she tries to negotiate an agreement with her bank to avoid eviction, but her only income is a monthly state handout of 426 euros ($565).

"I came here in 1998 - in Ecuador there was a crisis and everyone there left looking for a better life," Silva says. "But here now it's the same, or even worse."

This contrasts with a very different message offered by Prime Minister Mariano Rajoy only two weeks earlier, when he announced that "Spaniards are starting to see an improvement" after an economic crisis which had lasted over five years.

"Fatalism and desperation are giving way to a reasonable feeling of confidence about the future," he added, saying that painful austerity measures his conservative government had introduced were paying off.

New, temporary jobs

When Rajoy meets with Germany's Angela Merkel in Santiago de Compostela on August 24-25 he can point to recent economic data showing an improvement in several areas of the Spanish economy.

Earlier this year, the country officially emerged from a double-dip recession and in July the IMF revised upward its growth forecast for the Spanish economy for 2014 from 0.9 percent to 1.2 percent. Meanwhile, the Bank of Spain reported that credit for small companies, which have been among the main victims of the downturn of recent years, had increased by 10 percent in the last year.

Mariano Rajoy
Prime Minister Rajoy says things are getting better for SpaniardsImage: picture-alliance/abaca

Perhaps most relevantly for ordinary Spaniards, its jobs market is finally showing signs of improvement, or a "180-degree turnaround" in the words of Rajoy. With the number of jobless falling by around 300,000 in the first quarter, the unemployment rate dropped to 24.5 percent from 25.9 percent previously.

"The trend of jobs being destroyed has turned around and jobs are being created now," said Lluis Torrens, an economist at the IESE business school's Public-Private Sector Research Center in Barcelona.

The government claims that a controversial labor reform - which it introduced in 2012 to make hiring and firing easier - is bringing the jobless rate down. But Torrens says that the quality of the new jobs needs to be examined, not just their quantity.

"The work that is being created is part-time or temporary, so that doesn't generate stability," he said. "A bank isn't going to give a mortgage to someone who is on a temporary labor contract."

Banking on tourists and exports

Despite its apparent optimism, the government still expects unemployment to remain above 20 percent until 2017. And while credit is flowing more freely than it was during the depths of the slump, businesses are still paying substantially more interest than the euro-zone average.

Spain has banked heavily on tourism and exports to drag it out of the doldrums. The tourism industry is indeed performing well, with a record-breaking 28 million visitors in the first half of 2014. But with the euro-zone economy - the destination for 60 percent of Spain's exports - currently stumbling once again, exporting the way to full recovery is looking difficult.

"The instability of the job market in Spain is shameful," says Daisy Silva, who is considering returning to her native Ecuador. "The recovery is a facade. Those of us on the ground are living the reality, while those who are driven around in fancy cars don't see that reality."

Activists meet in a community center
Support groups meet to help debters find ways to deal with threats of evictionImage: DW/G. Hedgecoe

Evictions have been one of the most notorious symptoms of the economic crisis, as the high jobless rate left families unable to pay their mortgages, and Spain's strict foreclosure law made it difficult for them to negotiate with their banks. Although the government responded to campaigners' pressure by altering the law in 2013, it seems to have had little effect. Bank of Spain figures show that around 39,000 families were evicted last year, virtually the same as the 2012 figure.

A recent poll by Metroscopia showed that 74 percent of Spaniards believe the government does not know how to handle the economic situation. Only a third think Spain has a promising future.

The 'invisible' speak out

Meanwhile, other Spaniards who believe the recovery remains a mirage are making themselves heard, albeit in an unusual way.

This summer a poster campaign decrying social inequality has been waged in the Madrid district of Tetuan. Titled "Tetuan's Invisible Ones," local activists have plastered posters telling the stories of five women who are struggling to make ends meet on buildings across the neighborhood.

A poster plastered to a wall on Tetuan street
Activists lament a rise in social inequalityImage: DW/G. Hedgecoe

"I am one of 8,557 female pensioners in Tetuan who survive on 339 euros each month," reads one, beneath a portrait of a woman called Carmen.

"I can barely keep up with my monthly expenses," the caption continues. "I go to a food bank every two weeks. My main worry is paying the electricity bill."