An overview of the economic and political picture in Spain as the virus loses momentum
The Coronavirus outbreak is leaving a long-lasting toll on several aspects of Spanish society. At publication time, figures are estimated in +19k deceased, around 180k infected cases, and +75k recovered patients. For sure, it will take time to leave behind the distrust caused by this pandemic. Face masks and dispensable gloves will be of common use from now on.
Millions of Spaniards fear to lose their jobs. Although the government has barred dismissals during the state of alert, this is not a solution that suits everyone. Small-to-mid companies without liquidity may have no option but to close. But, small and mid-sized businesses are the main propulsors of profitable sectors like tourism. The 2020 summer income is at stake.
Spanish Economy as the Pandemic Strikes
More than a decade after the worldwide financial crisis of 2007-08, we are facing a global pandemic. The aftermath of the COVID-19 outbreak relates to WWII or the 1918 flu pandemic. Contrary to 2007, though, Spain currently holds a very high public debt that complicates the recovery. Thus, the path to going back to Dec 19 macro figures seems slow.
In 2019, the GDP (gross domestic product) grew around 2% concerning the previous year. Compared to the average of the eurozone, of 1.8%, Spain was performing well with prospects to keep growing. However, the pandemic has forced many businesses to close for weeks - nearly 2 months in some cases. Easter Week’s events have been massively canceled while the forecasts for summer are pessimistic. The economy has slowed down.
The Spread of Job Instability
Reforms have favored the businessmen over the workers in recent years. Making dismissals easier and full-time employees cost higher have propelled trash contracts. Laymen face a harsh reality; they must pass 90-trials to get into neverending 3-months contract cycles. This trend allows dismissals with little to zero compensation at will by employers.
Sectors like tourism and Horeca (hospitality, restaurant, and catering) are plagued with such abusive contracts. Thus, thousands of employees face a high uncertainty on their labor status. To make it worse, the ERTE (Record of Temporary Employment Regulation) requested by companies has pushed salaries to May at best. So, while employees make do burning their savings, the comeback to their jobs and salaries look uncertain.
Reaction to the Pandemic and Crisis Management
The measures adopted in this time of crisis do not make everyone happy. Pedro Sanchez announced the national state of alert on March, 14th when the infected cases totaled +6000. Some studies point out that a few hundred cases are enough to spread the COVID-19 in a country, around 300 to 500. Therefore, by any means, the official reaction arrived too late, when the outbreak was already an ongoing epidemic in our country.
Also, population behavior was far from adequate in some cases. When the lockdown started in Spain, it was still possible to roam from one city to another with few limitations. Thus, people traveling within communities unconsciously spread the virus. To make it worse, people have been found trying to travel for leisure during the state of alert, too.
Recession is not a possibility; it is already here. The question is how deep the bottom will be this time. And, how we will face economic and social hardships in a reshaped post-corona world. It is wise to grab prevention utensils (metal tools, facemasks, etc.) in the meantime.