Pensions stretched to keep Spanish families afloat amid worsening unemployment

Grandmothers are being forced to use their pensions to support entire families as the recession continues to ravage Europe.

Several thousand people noisily banging pots and pans marched down Madrid's main boulevard protesting the government's austerity measures last week.

MADRID // In a community hall in one of Madrid's most impoverished districts, a group of grandmothers share their stories of how Spain's economic crisis has turned their pensions into a lifeline for entire families.

The recession, which has ravaged much of Europe, has destroyed the fundamental hope of those who built neighbourhoods such as Orcasitas out of nothing - that they could give their children opportunities they never had.

"My son is a builder but he's been unemployed since January," said Concha Sanchez, a 67-year-old retired secretary. "He gets unemployment welfare, but he has a disabled son and between his mortgage payments and the cost of care, he cannot afford to live.

"The family survives off my pension. I buy the nappies and medicine for the baby."

Another woman speaks up. Her 59-year-old brother - a lorry driver for a construction firm - has not been paid for over a year and is now owed €50,000 (Dh240,000) in back pay and expenses, most of it from local government jobs. "He has three sons and cannot afford to eat," said Manoli Sanchez, 63. "He's still working and lawyers are trying to get the money, but there are 50 other people in the same position.

"I keep the family going with my pension. It is the same for all of us - we are all giving money to the next generation."

The women nod in agreement. Each has a similar story to tell - of entire generations of people out of work, of sons and daughters going unpaid for months at a time.

Until recently, the elderly in this working class district, about half an hour's drive from central Madrid, had looked forward to a comfortable retirement. That was before a huge property bubble, fuelled by a corrupt nexus between politicians, banks and developers, burst in 2008. It all but destroyed the banking and construction industries, triggering a recession that shows no sign of letting up.

Suddenly, those pensions - typically about €600 (Dh2,900) a month - have become vital to their families' survival. Orcasitas is at the bottom of almost every social indicator for the capital region, with an unemployment rate on par with Spain's desolate rural regions.

Locals say recent international media reports that the crisis is driving families to scavenge on rubbish heaps are exaggerated since Spain's traditionally strong family ties provide an effective support network in straitened times.

Only 35 years ago, Orcasitas was still a shanty town, populated by migrants from Spain's remote and destitute regions. A statue in the central plaza shows a woman in wellingtons carrying a bucket - a reminder that in the 1970s, wives here still walked more than a kilometre to fetch clean water. Today, its red-brick housing blocks look relatively neat and well planned in comparison to some of the sink-hole estates found on the edges of other European capitals.

But the young are increasingly out of work. More than half of under-25s here are unemployed - a figure that matches the national average.

"Every job that comes up, there are 200 other people going for it," said 24-year-old Daniel Espinoza, who lost his job as a software engineer in July. He had just emerged from the Orcasitas job centre with his girlfriend, Christina Simon, who lost her job as a librarian three weeks ago. "All our friends are in the same position. There is a lot of anxiety - a sense of being suffocated."

The Spanish newspaper El Pais recently carried a photo of 15,000 people queuing for 150 jobs at a new John Deere agricultural machinery factory in a neighbouring district of southern Madrid.

"All three of my brothers are unemployed - my father is the only earner in my house," said Ms Simon. "I did a three-year degree and two years' extra training - but now I'll be lucky to get a job as a waitress."

There are few positive signs on the horizon. The national jobless rate, currently 25 per cent, is forecast to grow for the sixth consecutive year in 2013.

The recession is pushing the year-old government of prime minister, Mariano Rajoy, ever closer to seeking a full financial bailout from Spain's euro-zone partners that would likely come packaged with even tougher austerity measures. The existing ones brought thousands of protesters on to the streets of Madrid last month.

"The problem is that nothing can replace the construction industry, which provided millions of jobs and huge tax revenues," said Fernando Fernandez, an economics professor at Madrid's Instituto de Empresa Business School.

"The government can try to foster entrepreneurship and hope companies hire, but that is a very difficult task when you are also trying to balance your budget and regain the confidence of the markets."

Many recognise the government's predicament, but in places like Orcasitas, it is impossible to escape the familiar sense that the poor are paying the price for corruption and mismanagement by the elite.

"We are happy to tighten our belts if they do the same," said Miguel Angel Sanchez, 38, who has already faced salary cuts at his administrative job at a nearby university and fears he may soon be fired.

"But those at the top are not affected. The cutbacks are always for people at the bottom."