Wednesday, July 4, 2007

we'll pay you to make babies!!

NYT reports the latest advance in social welfare from Western European states whose demographics are squeezing the same system to the breaking point:

Families will get $3,400 for each baby born in Spain as a reward for helping to raise the country’s low birthrate, Prime Minister José Luis Rodríguez Zapatero told Congress in his State of the Nation address. Spain’s birthrate for 2006 was 1.37 lifetime births per woman, among the lowest in Europe. (Reuters, July 4 2007)

And this was the highest such level in Spain since 1991! What gives? Well, like other Europeans, Spaniards have had fewer kids as their society has grown richer since the days of la vieja Espana. But it’s not just that. This is a complex phenomenon that is changing the face of EUrope and has people up in arms about future policy responses. And it directly affects all of us (by "us" I mean Europeans; luckily I am a member of the excellent American welfare state).

In the globalized 21st century, increased wealth comes with increased financial and professional instability. It’s quite hard for young people to get stable jobs (Spain has the highest percentage of young people with temp work in the EU). Also, due to the recent absurd housing boom —especially in the two big cities—rents are quite high in proportion to salaries, which remain low. And for a young couple to buy a flat? Don’t ask:

The average house price in Spain was €276,300, or $373,668, in December, according to Sociedad de Tasación, a property company. That is a 107 percent increase since the same period of 2000.

Joder! Read more gory detail here.

Add to that the fact that public university education is virtually free, which allows Spaniards to change their major 4 times and aprovechar de los anos estudiantiles--take advantage of the student years—for a long time. While living at home, of course.

This goes a long way toward explaining why so many young Spaniards (and their compatriots across Europa) are nervous about the future: careers are hard to start and starting later, pisos are $upercaro$, and to top it off, parents react by telling them how things were simpler when they were our age, and what a shame they missed the Movida (the hedonistic celebratory '80s boom that marked Spain’s entry into capitalism, democracy, consumerism, drugs. In a word, Almodovar).

Zapatero’s solution? Pay to procreate! Plus offer more attractive loans to young homeowners, or their parents. While this is a logical move, it’s only worsening the epidemic of debt that is spreading across the nation.

So there you have the briefly outlined vicious circle of trying to gain financial independence in Spain these days. It ain’t easy being young and middle class anymore (though at least mom still cooks up a nice paella).

More on this situacion en future posts.

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