Unemployment Rates in an Independent Catalonia

1. Present unemployment rates both in Catalonia and Spain


The Spanish economy has always had high unemployment rates of about 15% on average. Therefore Spain is the country with the highest unemployment rate in Europe by a wide margin. Spain also holds the record of unemployment rate for under 25 year olds. The lowest unemployment rates within Spain are those in the autonomous regions who manage their own taxes.


Unemployment in Catalonia has followed a similar pattern to that of Spain even though it has always been lower. Catalonia’s unemployment, anyway, has been getting closer to the Spanish one and the difference between them has been narrowing. By the end of the 90s there was a difference of 4 percentage points, but since 2001 they differ by just 2 percent. The relative difference is getting closer because of fiscal plundering and because Catalonia lacks the tools to improve its economy, which is quite different from the centralist oriented Spanish economy. As a result of this, unemployment is higher now in Catalonia than it is in Montenegro, Palestine (West Bank), Croatia, or Georgia. On the other hand, unemployment in European countries that became independent in recent times is much lower now than it is in Catalonia.


Youth unemployment in Catalonia is now at 43%. Catalan youngsters do not deserve all the unfair hardship and desperation we are putting on them. This lack of jobs is forcing many of them to emigrate in order to find jobs somewhere else.

2. Unemployment rate calculation in an independent Catalonia


The foreseen unemployment for an independent Catalonia can be calculated in three different ways:


2.1 Statistical Model


The statistical analysis of the data from OCDE can determine which are the most relevant variations that have an impact on a country’s unemployment rate. By applying such statistical methods to these significant variations, a statistical model can be revealed. With the application of this model on Catalonia’s economic data the resulting unemployment rate for an independent Catalan state would be between 6% and 7%.


2. 2.2 Mathematical Model


There is a direct mathematical ratio between the public expenses of country and its GDP. In a Catalan state, the absence of fiscal plundering will certainly allow higher public expenses. By applying the method of autoregressive values (Pons and Tremosa, 2002) on a Catalonia free of fiscal plundering, one can predict its unemployment rate. According to this method, for each 1% of GDP invested in the public sector, the GDP will grow by 0,52% and employment by 0,29%. Such an effect is distributed decreasingly during five years as time goes by. So, if all fiscal deficit was invested in Catalonia, about 400,000 jobs could be created and unemployment rate would drop from 22% to 12%.


2. 2.3 Comparative Method


By looking at the unemployment rates of other countries with similar economies as Catalonia, one can infer also the unemployment rate for an independent Catalan state. The great majority of countries with a GDP/capita similar to that of Catalonia have less than 10% unemployment rate.



3. Conclusions


By comparing these three methods, we can conclude that unemployment rates in an independent Catalonia would most probably be around 12% and would therefore be similar to that of other European countries.


One final bit of data and a thought: a decent salary (€30,000 net per year) for 350,000 unemployed Catalans adds up to €10.5bn, which is 60% of €17,600m, the total fiscal deficit in 2010.