Spanish unemployment could take 10 more years to return to the levels seen before the financial crisis, according to a report that paints a picture of an economy hampered by low wages, low skills and lack of investment in research.
Spanish workers earn 20%-40% less than those in other leading European countries, according to the study by Spain's second-biggest bank, BBVA. The earnings gap is partly explained by very high unemployment, which BBVA said "derives from a labour market that functions substantially worse than in other countries".
The bank found Spanish spending on research and development is 70% below the US or EU average, and said the economy suffered from low skills and a lack of technology in the workplace.
"All of these differences derive from an inadequate legal and institutional system of incentives," the report said. The researchers forecast that even if employment increased at a rate of 2% it would take 10 years to reach 2007 levels.
Calling for long-term "balanced, solid and inclusive" growth to bring per capita income in line with the US and eurozone competitors, the report urged Spain's traditionally small- and medium-sized firms to enlarge and seek international markets. "Large companies are more productive, have more human capital, survive longer, invest more in R&D and export more," it said, adding that this enlargement would only occur if legal, financial and fiscal obstacles were removed.
It noted that for each percentage point fall in unemployment there was a 0.6% rise in GDP, so reducing unemployment also cuts public debt, which is now at record levels.
Figures released on Monday by the Bank of Spain show public debt rose by €8.1bn (£6.7bn) in February, taking the total owed by central and regional government to a record €988bn, equivalent to 95% of the nation's annual GDP.
Meanwhile, protesters from the Mortgage Victims' Platform (PAH) have staged protests against home repossessions. However, in spite of the huge over-capacity in the Spanish housing market, foreign investors continue to find it attractive. Foreign investment in property has increased for the fourth year running, with €6.5bn invested in 2013 – 16% up on the preceding year.
According to the Bank of Spain, this is the first time foreign property investment has risen above €6bn since 2004.
In contrast, Spanish property investment abroad fell to €355m, the lowest level in 12 years and 89% less than in 2007. New mortgages, meanwhile, fell by 27.8% in 2013, the lowest number in the past five years, while average house prices fell by 7.8%, a slower fall than in the preceding two years. Housing sales fell by 2.2%. The average Spanish family spends 34% of their income on their mortgage.
According to the society of property registrars, the biggest number of foreign investors in property are Britons (15.1%), followed by the French (9.8%), Russians (8.6%) and Belgians (7.3%).
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DONETSK, Ukraine (AP) - Ninety percent of voters in a key industrial region in eastern Ukraine came out in favor of sovereignty Sunday, pro-Russian insurgents said in announcing preliminary results of a twin referendum that is certain to deepen the turmoil in the country.
Roman Lyagin, election chief of the self-styled Donetsk People's Republic, said around 75 percent of the Donetsk region's 3 million or so eligible voters cast ballots, and the vast majority backed self-rule.
With no international election monitors in place, it was all but impossible to verify the insurgents' claims. The preliminary vote count was announced just two hours after the polls closed in an election conducted via paper ballots.
A second referendum organized by pro-Russian separatists was held Sunday in eastern Ukraine's industrial Luhansk region, but no immediate results were released.
Ukraine's central government and the West had condemned the balloting as a sham and a violation of international law, and they have accused Moscow of orchestrating the unrest in a possible attempt to grab another piece of the country weeks after the annexation of Crimea.
The results of the two referendums could hasten the breakup of the country and worsen what is already the gravest crisis between the West and Russia since the end of the Cold War.
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