A DENSE, COMPACT town of 58,000 people near the gateway to Andalucía from Spain’s central plateau, Linares has been successively a centre of lead mining, a railway hub and the site of a large factory making Santana jeeps. Today it is a town with a reputation: at 33%, its unemployment rate is the highest in Spain. The Santana factory, with more than 2,000 jobs in its heyday, closed in 2011. High-speed trains to Seville and Granada bypass Linares. A large Corte Inglés department store closed in March and stands in the main square, decaying like a rotten tooth. Inditex, a fast-fashion giant, recently closed most of its shops in the town too. “I’ve been looking for work for months,” says Carlos Márquez, aged 21, who was laid off from his pre-pandemic job, selling mobile phones in a hypermarket. “There’s nothing in Linares. I would have to go somewhere else.”
The town’s reputation is overdone, insists Raúl Caro-Accino, the mayor. He points to technology businesses in industrial estates on the outskirts, with more to come, many drawn by the presence of the technology faculty of the University of Jaén. Its level of unemployment is in line with other places in southern and western Spain, the mayor insists. “We have a problem of unqualified labour,” he admits. And that goes for much of the country.
Long before the pandemic, Spain stood out in Europe for its chronically high unemployment, especially among young people, and for the high number of workers on temporary contracts (currently 25% of all those with jobs). The slump occasioned by the financial crisis of 2007-09 saw millions join the ranks of the jobless, though it was followed by a strong recovery (see chart). Now the pandemic has hit Spain’s economy harder than its European neighbours once again. That is mainly because of its heavy dependence on tourism and vulnerable small businesses. After stops and starts because of successive waves of covid-19, a strong recovery is under way. But only around half of the foreign tourists who visited in 2019 are likely to come this summer.
There are two bright spots. In contrast to 2007-09, the government was able to take emergency measures, in the form of credit guarantees for firms and a state-supported furlough scheme which at its peak last year paid most of the salaries of 3.4m workers. Only 360,000 still need this help; the rest have gone back to their jobs. “This is the first recession in which employment and tax revenues have fallen less than the fall in GDP,” says Nadia Calviño, the economy minister.
The second boost is that over the next three years Spain is due to receive €70bn ($83bn) in grants from the EU’s Next Generation recovery scheme, along with a similar amount of soft loans. Much of this will go on big projects aimed at creating a greener, more digital economy, such as one for electric cars and a battery factory. But there will be plenty of money, too, for overhauling public administration and vocational training, and for active labour-market policies to help the unemployed find jobs. It is a peerless opportunity to tackle Spain’s chronic joblessness problem.
The aid is tied to a commitment to reforms, especially of the labour market and pensions. And on these matters the left-wing coalition government of Pedro Sánchez is divided. The European Commission reckons Spain needs to make its labour market more flexible while tackling employers’ abuse of temporary contracts. But Yolanda Díaz, the labour minister chosen by Podemos, the coalition’s junior, far-left partner, wants to repeal a 2012 reform. That introduced some flexibility, giving firm-level agreements priority over industry-wide ones and cutting severance pay, though to levels that are still generous. This commitment is backed by the trade unions and is in the coalition agreement between Mr Sánchez’s Socialists and Podemos. Ms Díaz also wants to abolish temporary contracts. “These proposals would lead to the most restrictive and rigid labour-market regime” in Europe, says Marcel Jansen, an economist at Fedea, a think-tank. They risk destroying jobs rather than creating them.
Ms Calviño, a former budget director at the European Commission, leads the government’s reformist wing. She says Spain needs a bundle of measures that strike a balance between flexibility and curbing temporary contracts. She hopes talks with the unions and business will bring agreement on these by the end of this year. In a reshuffle in July she became first deputy prime minister. Since the EU can cut off funds if constructive reforms are not approved, she is likely to prevail over Ms Díaz, though not totally. The unions have influence, too. It is a strength of the Socialists that, unlike some other social-democratic parties, they have retained a working-class base. “It’s very hard for a government with a feeble majority to agree on reforms that comply with the European agenda,” notes Mr Jansen.
To tackle unemployment, training and education need a radical shake-up too. A third of young Spaniards leave school without any qualification, and only a quarter of school-leavers enter vocational training, compared with half in Germany, points out Manuel Pérez-Sala of the Círculo de Empresarios, a business think-tank. Spain spends €6bn a year on active labour-market policies but much of this is wasted. Under European pressure the government recently reinstated a policy of linking the financing of training to results which it had scrapped. New laws on education and training may help, if they are fully implemented.
Another doubt concerns how the EU money is administered. The opposition complains that control is centralised in the Moncloa, the prime-ministerial complex. Regional governments want their share. “I think they have understood that this is a co-ordinated national plan,” says Ms Calviño. Spain has usually been slow to spend EU structural funds, though it does so in the end. In Linares, the mayor is sceptical. “We need a more flexible administrative structure,” he says. “The province is frustrated because it was promised things that didn’t happen.” In the end the success of the EU’s efforts will be judged not just by whether it manages to make the economy greener, but also by whether it endows places like Linares with a more productive workforce.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
