Going Benalup: Unemployment and easy credit (22 November)

There is a town in the province of Cádiz in Andalusia that has the worst unemployment rate in Europe. It is called Benalup (or Benalup-Casas Viejas, to give it its full name). In an article by Giles Tremlett in “The Observer” on Sunday, the collapse of what, for a brief time, had become a boom town is chronicled, and the story of Benalup tells you mostly all you need to know about why Spain is in such a mess and is going to have one hell of a struggle getting out of it.

Benalup is by no means unique, even if it can lay claim to that unwanted unemployment crown. Spain is full of Benalups, and Mallorca shares its problems. To summarise Tremlett’s main points, the Benalup belly-up effect was founded on excessive credit and on a glut of construction jobs that paid well and took teenagers out of education.

It won’t sit well with the La Caixa bank, known also for its Obra Social good works programmes, that it gets fingered as having triggered a lending war among the banks that flooded into the town in search of mortgage customers, many of them young and having turned their backs on school in the knowledge that they could earn handsome wages in the construction industry.

Construction was the first and most obvious victim of economic crisis, and it took its labour force down with it. In Benalup, those who had left school at sixteen and who had embarked on a side career of avaricious material grab are just part of the almost 50% of Spain’s under-25s that are unemployed. This material grab has left Benalup, as Tremlett remarks, “plastered with ‘for sale’ signs”, those of La Caixa’s estate-agency arm, which has been forced to repossess.

Much of the construction was centred on the coastal area. The Benalup story, therefore, is a not unfamiliar one of the two heads of construction and tourism that is the economy of much of Spain, Mallorca included. But Benalup, some kilometres inland, doesn’t have the luxury of the fallback position of tourism. Without the construction on the coast, it doesn’t really have anything.

The dependence on construction and tourism in different parts of Spain is just one factor that has undermined Spain’s economy. Subject to the vagaries of economic cycles, both industries also contribute to a devaluing of the general skills base and of the education system. Easy money can be had, or could, and the state would provide some assistance in the winter for those less inclined to slog around a building site.

The education system is not that great anyway, and in Mallorca it is particularly poor. But through a combination of the system’s inadequacies, a lack of incentive to stay in education and the promise of riches from humping bricks about (now gone), general competitiveness is also undermined.

One solution to the unemployment in Benalup is a state­-funded training course, assuming you can get on it. Not that it necessarily opens up subsequent employment opportunities, as the course is for graphic design. In Mallorca, there are any number of young graphic designers. They are two a penny. Many are good, but where’s the work? Economies do not generate wealth or growth through graphic design. It is a pitiable non-­solution.

The Zapatero administration presided over the end-game of the great Spanish boom. It deserves to be criticised, but it is not alone. Successive governments have perpetuated an aspirational dream for a country that was in the economic dark ages only half a century ago. One mistake, aided by the banks, was to break with a traditional cash­-based society and replace it with one based on credit, and very easy and loose credit at that. The country’s richness, as evident from a lofty position in the IMF GDP league table, obscures a reality of over­dependence on certain industries and a lack of competitiveness.

There is fortunately some realism coming from the newly elected government, an acceptance that Spain isn’t that rich and that the mechanisms for granting the population the trappings of aspirational wealth were largely built on sand. Within a framework of this new realism, how, though, can Rajoy set about realising his election promises, such as that to reduce unemployment?

I’ll have a look at that in a further article. But for now, and notwithstanding the fact that the Spanish electorate does appear to “get it” where the country’s parlous position is concerned, I’ll leave you with a piece of history. In 1933, Benalup was the centre of an anarchist uprising and a police massacre. Thank God it’s not 1933.

The original “Observer” article:
http://www.guardian.co.uk/world/2011/nov/20/spain-benalup-unemployment-euro-crisis

Any comments to andrew@thealcudiaguide.com please.

We Can’t Go On This Way: Sustainable tourism in Mallorca

Any idea who Ivan Murray is? Probably not. So I shall tell you. His grandmother was Canadian of Scottish origin, he lives in Port Soller and is an academic at the university in Palma, whose specialism is the sustainability of tourism in the Balearics. What he has to say is important.

In yesterday’s “Diario” there was a report into findings of a study led by Dr. Murray into different facets of tourism in Mallorca (and the Balearics). Perhaps the most revealing was that in order to realise a million euros worth of tourist expenditure, the number of tourists necessary to meet this target increased by almost 500 over the period from 2003 to 2008. The 2008 figure is 1906 tourists to make the million mark, a percentage rise of 35%. Over a third more. In six years, six years before the crisis took hold.

Ok, so what, you might ask. Just another set of statistics. True. But unlike the figures which get bandied about by the regional government, and which many tend not to believe, Murray’s findings are, one would hope, independent. In an interview with the Diario’s Matías Vallés a couple of years ago, Vallés suggested that Murray might just be a bit of a moaning leftie. By implication, this suggests he may have an agenda. Possibly, but academic rigour, and the demands placed on academics to support their research, might negate any hint of political bias. One should take Murray’s findings for what they are, because they are significant.

While government figures always seem to indicate an increase in tourist spend, Murray refutes these. There has been a year-on-year decline if you take the annual growth in the numbers necessary to meet the target of a million euros (the figure did actually drop, however, from 2007 to 2008). Moreover, the findings beg some questions, most obviously why are that many more tourists needed to reach the spending level and what does this mean for pressure on resources. No answer is given in the paper’s article to the first of these, but one might begin to hazard a guess or two. Let me make one such – the rise of all-inclusives, possibly?

Murray points out that despite the reliance on tourism to sustain the Balearic economy, there is a loss in efficiency, by which he means that increasing numbers of tourists are needed just to stand still, while these increasing numbers place ever more stress on the ability to cope with them. Consider this. In 2008 the highest recorded total population of the islands (that’s everyone, tourists included) occurred between 10 and 12 August. The number was 1,930,000, or 1.8 times the actual normal population. And this is a figure spread out across the whole of the Balearics. Consider Alcúdia. If one takes its resident population to be 16,000 (and one does tend to get different figures), its population at the height of summer is – a guesstimate – about 45-50,000 (there are some 26,000 hotel places in Alcúdia to which one can add other types of accommodation and the temporary workforce). Around three times the normal population in other words.

In the earlier interview, Murray was asked what would be the ideal tourism population of the islands. He didn’t really answer this, but did say that twelve million tourists (roughly accurate in terms of total annual tourists) is “an aberration without comparison in the whole world”.

It is often in the nature of academia to raise questions and pose problems rather than necessarily answer the questions. While Murray clearly considers the tourism population to be excessive, he has also said that, strictly speaking, only six per cent of Mallorca is “constructed”. While he would not advocate more construction, his findings imply that this is what is needed in order to increase tourism numbers just so that economic growth can be – at best – in neutral. It is a deeply worrying conclusion. Where would these tourists come from anyway?

Murray has also referred to a highly polarised society. He is not wrong to do so, and by doing so he paints a picture of potential increased social division allied to an economic model – of tourism – that is not sustainable, unless there is more and more construction in order to grow the tourism population. And even then, were the trend towards all-inclusive and to a more cautiously-spending tourist to persist, the numbers would continue to rise ever more in order to keep parity with that one million benchmark. Ever more construction, ever more tourists, and for what? But one does perhaps have to ask again the question as to what this population could or should be. The problem is that no-one, not even Dr. Murray I would suggest, can give an accurate answer, because I suspect that no-one actually knows. He has said that the Balearics have been a “field of experimentation”, and in this he is correct. The experiment was in introducing mass tourism and in its growing like topsy, without any real regard to its ultimate sustainability or to the changing nature of markets and competition or to economic diversification.

Any comments to andrew@thealcudiaguide.com please.