The Pain in Spain

Madrid-Antonio de la Calle, a 46-year-old priest who runs the church of the Patrocinio del Señor in the Vallecas neighborhood, has been playing God to avoid his neighbors' descent into hell. In this working-class neighborhood of more than 300,000 people, the most extreme consequences of the economic crisis roiling Spain are transforming day-to-day life. The door of the church is never locked. Last Easter, a man came in, heated and nervous. "Antonio, I can't stand it any more. You have to help me. For two months I have heard my kid complaining that he is hungry. I've been unemployed for a year and a half. I'm no longer entitled to unemployment payments and my wife isn't eligible for the emergency subsidy. Either you help me or I will start selling drugs at the corner. I cannot take it any longer."

For weeks, Father Antonio used his own cash to keep this father of a hungry child away from crime. A few months ago, the man found a temporary job.

"It's been a tough winter," the priest explains. "People can't get enough to eat. The worst is seeing kids evicted because their parents can no longer pay their rent."

In Spain, 4.69 million people-20.3 percent of the workforce-were unemployed in 2010, according to figures published by the National Statistics Institute. The December 2010 average for the European Union was 9.6 percent, just above the 9.4 percent posted in the United States. Spain, with a population of 46 million, has lost more than 2 million jobs in the last two years- 623,000 in 2008, 1.21 million in 2009, and 238,000 in 2010, according to government statistics. Most of these losses occurred in the Spanish construction sector, which was largely responsible for the country's financial and labor boom-and the subsequent bust.

"For historic reasons, the consensus among Spanish business owners is that economic adjustment must happen through layoffs and productivity gains," says Fernando González Urbaneja, a well respected economist and president of the Press Association of Madrid. "It happened in the 1970s, when Spain ceased being an archaic economy with 20 percent rural employment and a million migrants abroad. And again in 1992 to 1994, after the Seville Universal Exhibition was over, when a million jobs were destroyed very quickly. But today the euro prevents us from devaluing our currency, so unemployment and lower salaries are the only options left."

Of course, Spain is hardly the only European country struggling through a profound economic crisis. Greece and Ireland both experienced spectacular economic failures requiring bailouts that threatened the very foundations of the Eurozone. Portugal may be on the brink of a similar scenario. (Both Iberian nations are said to be the next targets of bond vigilantes who prey on weakness, real or imagined.)

But Spain's influence and impact on Europe's economic health is far more consequential than those countries'. Its economy is the fifth-largest in Europe, more than four times the size of Greece's and more than six times the size of Ireland's. Its industries, agriculture, financial sector, and consumer markets are integral to the overall European economy-prompting fears that the effect of a Spanish collapse would be less like a ripple and more like a tsunami.

Just as troubling is the sense that Spain's problems might stem from deeply rooted flaws in contemporary Spanish society, and could prove harder to address than the problems that have bankrupted other European nations. It's a fear fed by anxiety over the current employment crisis. To get a sense of just how grim Spain's employment picture has become, consider four figures. First, in 2010 in Spain, there were 1.3 million families-comprising roughly 8 percent of the population-in which every working-age family member was unemployed. Second, 45 percent of jobless people are long-term unemployed, meaning they have been looking for a job for more than a year. Third, Spain has Europe's highest youth unemployment. Some 42...