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Spain : 5 Million Unemployed and still understaffed

Source: Bloomberg - Sun 3rd Jul 2016
Spain : 5 Million Unemployed and still understaffed

Spanish headhunter Samuel Pimentel just can’t find the candidates.

After a frustrating search for specialist consultants for a client, he’s given up and is casting his net elsewhere.

“We were looking for people for two months,” Pimentel, a partner at Ackermann Beaumont Group for Spain and Latin America, said in a telephone interview. “We managed to find one in Spain. We turned to Argentina for others.”

Pimentel’s experience reflects a bizarre feature of the Spanish labour market that is hampering the country’s efforts to repair the damage from the economic crisis. Even with close to 5 million people out of work, the next prime minister will face labour shortages with employers struggle to find the staff they need.

“It’s a paradox,” said Valentin Bote, head of research in Spain at Randstad, a recruitment agency. “The unemployment rate is too high. Yet we’re seeing some tension in the labour market because unemployed people don’t have the skills employers demand.”

From software developers and mathematical modellers to geriatric nurses and care workers, a mismatch in qualifications means companies are struggling to fill posts, even though the unemployment rate at 20.4% is the second-highest in Europe. Randstad estimates that Spanish companies may struggle to fill almost 2m posts through 2020.

Caretaker PM Mariano Rajoy, the front-runner to lead the next government after posting gains in Sunday’s election, has pledged to add half a million jobs a year, but his campaign focused on posts for the legions of unemployed, rather than producing skilled workers to power the economy. Rajoy’s opponents say his policy of driving down wages and stripping back job protection has mainly created poorly-paid low-skill posts.

The failure to equip sufficient numbers of workers with the skills sought by modern companies is holding back the Spanish economy. The skills shortage is a drag on productivity, delays investment and strains a pension system dependent on new workers with good salaries to pay for an aging population, according to Sandalio Gomez, emeritus professor at the IESE Business School in Madrid.

“The workforce does not have the qualifications the market needs,” he said. “That’s a real problem.”

As Rajoy tries to build bridges with his rivals ahead of talks on a governing alliance, he’s offering a cross-party initiative to address flaws the education system. Spain has had seven different education laws since 1978, but arguments about the use of regional languages like Catalan or the status of religious teaching have often crowded out debate about more fundamental problems that have led to a high-school dropout rate that is twice the European average.

“Education and work exist in two alternative worlds that don’t really connect,” Gomez said. “While in other nations, like the US, college education is designed to get you a job, that’s not the case in Spain.”

In its election manifesto, Rajoy’s People’s Party also vowed to put more emphasis on technology in schools and get more students learning English. During his first term, Rajoy hired private agencies to work alongside unions in retraining and recruitment and tied the funding for public jobs programs to results.

Yet the new administration is facing a problem that has been decades in the making.

Even when senior posts are filled, Spanish companies have to make do with lower-calibre candidates than their competitors in other European countries, and that hurts the profitability and resilience of companies, according to the Bank of Spain’s 2015 annual report. Spanish executives are less-skilled than their competitors in Germany, France or Italy, according to a study of 11 European countries. Only Greece came out worse.

Pimentel’s client asked him for list of candidates trained in “Agile” project management techniques for helping companies boost their productivity by using more IT systems. The client was offering as much as EU200,000 a year — almost 10 times the average salary in Spain.

But such people are thin on the ground in Spain. It takes at least eight months for an experienced software developer to earn an Agile qualification and they also need the ability to deal with senior executives, limiting the pool of people who could potentially fill the roles.

“This society urgently needs digital professionals but there aren’t really enough places where you can learn those skills,” Pimentel said. “Spain is a country that is not really investing enough in technology.”

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