Economic Crisis Spreads in Spain

Workers across southern Europe took to the streets last week to protest the region's growing unemployment and government spending cuts.

While few people reportedly turned out in countries such as Denmark and Germany, many participated in nationwide strikes within Spain, Portugal and Greece -- forcing the closure of some businesses and public transportation routes as well as the cancellation of numerous flights throughout the region.

In Madrid, thousands of people poured into the city's center, and some of them left behind a trail of union flyers on the street and graffiti on storefront windows. With the sound of sharp whistles blowing and drums banging, many denounced proposed austerity measures, such as privatizing some hospital jobs and cutting positions for teachers.

Multiple countries across Europe are facing serious financial troubles, though problems have reached historic highs in Spain. One Spaniard in four is now unemployed, and half of all youth are without jobs. Some have turned to the informal economy to earn whatever wages they can. But many rely on their extended family members to help maintain a financial safety net -- and in some families now no one is working. "The principle way in which people protect themselves from the risks of the market -- that is, not having income, being disabled, needing money to put food on your plate, paying your mortgage etc. -- is through their extended family network," said Kenneth Dubin, a professor in human resources and strategy at IE Business School in Madrid.

"Extended family networks are absolutely critical part of the safety net here," Dubin added. "It's what explains why you can have 25 percent unemployment -- and not have a social revolution." But demonstrations here are becoming more frequent. And vocal. Last was the second general strike in less than one year in Spain, and thousands marched in Madrid last month to protest austerity measures.

Many debt-ridden residents are now growing increasingly concerned over losing their homes. Around 400,000 homes have been foreclosed over the past five years, according to data from AFES, an advisory group for struggling homeowners.

Last week, a woman in Spain committed suicide as officials tried to seize her home. The country's banking association, AEB, has since announced a two-year freeze on repossessions for "humanitarian reasons."

The housing industry faces further challenges, though, as there is a lack of opportunities for workers who once rushed into this sector. "Spain went through a housing bubble that drove talent and expertise to construction and real estate," said Pablo Esteves, director of branding and partnerships at Emzingo, which helps train students and develop business leaders in Spain and other countries around the world. "It will be a long road to reemploy this talent."

SAP, the German technology company, was hosting 11,000 customers, employees and analysts at an annual conference last week in Madrid. The company's co-CEO, Jim Hagemann Snabe, moved up his keynote by a day due to the strike and noted unemployment -- not a weak Euro -- was Europe's biggest challenge going forward. "For me, the biggest challenge is the unemployment among young people," he said. "In Spain, we hear 50 percent of unemployment among young people -- that is unacceptable."

Snabe also announced last week that SAP would be launching a new online learning platform to help educate and train unemployed youth affected by Europe's economic challenges. While it launched in Spain, the program will expand to nearby countries such as Portugal, where Snabe says he met with the country's president last week to discuss youth joblessness. "Our vision is to educate 100,000 young people in technology in Europe," Snabe said, "and we will start right here in Spain."

Joaquín Mencía, an employee at Telefonica in Madrid, blames part of the country's economic woes on a weak education system. He notes there's a lack of top-tier schools and that young students need to be better incentivized to excel at their studies. "It's an education system crisis," he said.