• Spain's news in English

Black economy clouds Spain's recovery

AFP · 27 Jul 2015, 08:41

Published: 27 Jul 2015 08:41 GMT+02:00

Facebook Twitter Google+ reddit

"Nowadays the phrase 'steady job' means nothing in Spain," said Paloma Sotillo, 43.

She is one of 1.7 million people in Spain who admit to earning at least part of their pay in the "black economy", without tax or social security contributions.

Spain's economy returned to growth in 2013 after five years of economic crisis, but its unemployment rate is still the second-highest in the eurozone after Greece.

The rate dipped to 22.37 percent in the second quarter of this year, according to official data published this week.

Job creation? The truth behind the figures

A study by Catalan business school Esade indicated however that one in 10 employees and one in five unemployed people in Spain did work for earnings that they did not declare to the taxman.

Sotillo said she had been unemployed for a year when she found a job in a Madrid toyshop in December 2013. She worked there for a year before stopping in order to look after her sick mother. 

"I had a contract to work 30 hours a week, but I worked 35 and they paid me the difference cash-in-hand," she said -- a salary of 700 euros plus an undeclared supplement of 120 euros.

'Corruption encourages tax-dodging'

The tax collectors' union Gestha says the vast black economy has for decades undermined Spain, the eurozone's fourth-biggest economy.

It estimates the black economy equals about a quarter of Spain's gross domestic product -- or roughly a quarter of a trillion euros.

For Gestha, that makes Spain one of the fiscal bad boys of Europe, along with Greece, Italy, Portugal and Poland.

Economists say the cash-in-hand habit is strongest in agriculture, building, domestic work, trade and tourism.

"The high level of unemployment has increased it," said Gestha's president, Carlos Cruzado.

He said Spain suffers from a culture of tax avoidance, fuelled by indignation over constant reports of political corruption, and also lacks enough tax inspectors.

During the boom decade before Spain's crisis broke out, companies subcontracted a lot of their work to workers whom they paid in cash in order to keep up with demand, said Princeton University sociologist Alejandro Portes.

Then in the crisis, this gave way to "an informal economy of survival" of technically unemployed people living hand-to-mouth from casual jobs, he said.

Cruzado complained that the black economy persists partly due to a belief that stopping people earning that way in a crisis could have explosive consequences.

It is hard to do away with a system that supports many people who have exhausted all their welfare subsidies in the crisis.

"There is a theory in Spain that, with five million people unemployed, there would be a revolt on the street if it were not for the underground economy," Cruzado said.

Full-time jobs wanted

Prime Minister Mariano Rajoy says Spain created 400,000 jobs last year and will add a further 600,000 in 2015.

Story continues below…

The unemployment rate declined by 1.4 percentage points in the second quarter, according to the National Statistics Institute.

But experts, including specialists from the OECD grouping of developed countries, warn that in Spain, as in countries such as Greece and Italy, many workers are longing for full-time work.

Angel Valls of Esade estimated that 83 percent of contracts signed in the second quarter in Spain were temporary ones, but warns that Spaniards demand more from their developed economy.

"The quality of our jobs is very bad," he said.

"Part-time work is becoming more common, but most people working part-time in Spain don't want to work as a cook in a cafe."

By Laure Fillon

For more news from Spain, join us on Facebook and Twitter.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Spain's Podemos sees golden opportunity in Socialist woes
Pablo Iglesias is ready to step up in opposition. Photo: AFP

As Spain's conservatives prepare to re-take power after 10 months of political limbo, anti-austerity party Podemos has set its sights on replacing the divided Socialists as the main opposition force.

Wildlife ranger accused over decapitated bison in Valencia
The headless corpse of Sauro was found last month. Photo: Carlos Alamo / Reserva de Valdeserrillas

The case of the beheaded bison at a wildlife reserve in Valencia just got a whole lot weirder.

Spain jobless drops below 20% for first time in six years
The unemployed queuing up outside a Madrid job centre. Photo: AFP

Spain's unemployment fell below 20 percent for the first time in six years, official figures showed on Thursday.

'Saints not ghouls' insists Spanish church for Halloween
Suggested outfits from the Bishopric of Cadiz and Ceuta. Photo: Shower of Roses

Spanish bishops are urging good Christian children to forgo zombie, ghost and devil outfits and instead dress up as "saints, virgins and apostles".

Tough road ahead, Spain PM warns before return to power
Rajoy will try and form a government this week. Photo: AFP

Spain's acting Prime Minister Mariano Rajoy warned on Wednesday of a tough road ahead as he prepares to take power again at the head of a minority government with little support.

Russia withdraws request to refuel warships in Ceuta
The aircraft carrier Admiral Kuznetsov was due to dock in Ceuta

Russia has withdrawn a request for its aircraft carrier group to be refuelled at the Spanish port of Ceuta, authorities confirmed.

Bulls replace guard dogs at scrap yard in Valencia
Two bulls will be patrolling the scrap yard in eastern Spain. Archive photo: AFP

Guard dogs were not proving enough of a deterrent to thieves at a car breakers yard in eastern Spain so the owner has brought in a pair of fighting bulls.

Two-headed shark born in Spanish laboratory
Scientists are studying the rare find. Photo: IBIMA / University of Malaga

Scientists at the University of Malaga found the embryo of a shark with two heads and just one body.

Spain under pressure to stop refuel of Russian warships
Russian aircraft carrier Admiral Kuznetsov is due to arrive in Ceuta. Photo: Mil Ru / Wikimedia

Spain is facing international pressure to refuse permission for a Russian warship flotilla to refuel in Ceuta en route to continuing airstrikes against the Syrian city of Aleppo.

Most wanted: Fugitive rapist arrested in Tenerife
Mohammed Jahangir Alam was arrested n Tenerife. Photo: Crimestoppers.

Mohammed Jahangir Alam, one of Britain's most wanted fugitives, who fled the country in 2008 after allegedly raping a woman, was found working in Tenerife.

Analysis & Opinion
Out of the dark: Five years on from Eta ceasefire
Sponsored Article
Last chance to vote absentee in the US elections
Spanish 'La Mafia' restaurants banned after Italian complaint
Spain's top court overturns bullfighting ban in Catalonia
Hunt launched for ten most wanted Brit fugitives hiding out in Spain
Napflix: Spaniards launch very boring TV channel for siestas
Madrid parish church faces fine over 'too noisy' bells
Celebrate expat life at Madrid’s THRIVE convention
Fury after kids told to bring their own loo roll to school
Disney announces plans for Don Quixote action movie
Activist tells 8-yr-old matador wannabe with cancer 'just die'
King to make last minute push to avoid third vote in Spain
Amazing photos of Catalonia's 'human tower' contest
What's on in Spain: October 2016
'No way, Jose! You'll never get your hands on our Rock'
Recipe: How to make a classic Spanish tortilla de patatas
Chorizo in paella? Go back to cooking school Jamie Oliver
Spain in eye of a perfect storm after 10 months without govt
Thousands share clips of life for 'Spain in a Day' film
Ten incredible Spain locations for Game of Thrones season 7
Analysis & Opinion
Why moving to Spain could be the best decision of your life
Seven reasons why autumn is the very best season in Spain
Spanish study finds four types of personality. Which are you?
New search underway for civil war grave of poet Lorca
jobs available