Lessening the pain in Spain

July 12, 2010: When Spain's Andres Iniesta muscled a shot past the outstretched Netherlands goalkeeper at the 116 minute mark of the World Cup Championship, he not only gave his country their first soccer title, but gave his nation the ability to forget about their economic woes, albeit briefly.

The country is in serious financial trouble. In fact many European Union watchers say Spain could be the next Greece to ask for a bailout from the EU.

With adult unemployment hovering at twenty percent and the rate of youth unemployment at forty percent, the country has little to cheer with hard to swallow austerity measures coming down the road.

Spain has one of the worst structural labor markets in the world. A public employee cannot be moved from one department to another and can't be moved from one shift to another. Basically, a Spanish public worker cannot be fired, transferred or moved.

Absentiesm is high, due to lax work rules and to make matters worse, in the region of Madrid, out of the 6.5 million people that live there, 500,000 work for government.

Like Greece, the Spanish government has delayed austerity measures for far too long.   

Under the newly proposed reforms by President Zapatero's Socialist government, severance payouts will be less, companies will have relaxed rules to layoff workers during times of slowdown and labor contracts will be restructured.

There have already been protests in the streets and the two largest unions have already announced a strike to protest reforms, but to show how bad it is, they scheduled the strike for three months from now.

Spain has long been considered the poster child for labor reform. Privaledged employees are protected so tightly it has discouraged new permanent jobs. Now faced with a serious fiscal crisis and growing unrest at home as unemployment skyrockets among youth, the country is slowly reacting.

Spain deserves to enjoy its time in the spotlight for a hard fought World Cup Victory.

However, the only thing the financial markets will continue to care about is the fact that Spain's borrowing costs have now reached record levels.

Photo credit Rueters