Spain Stays Afloat on the Shadow Economy

Under a corrupt and tax-hungry government, off-the-books work accounts for the equivalent of a quarter of the official economy

Whenever I mention Spain's escalating unemployment figures to Majorcan friends they shrug philosophically often with a wry smile and helpfully assure me that the 5.7 million quoted in the media is wide of the mark. After all, they say, it's just an official estimate. What about all those unaccounted for, the hardworking souls supporting the black economy who manage to keep well below the tax radar?

Of course they're right. Currently it's estimated that the underground economy in Spain accounts for more than 22 per cent of the country's gross domestic product (GDP). Some economists believe it to be as high as 25 per cent and in the current crisis that figure will no doubt continue to rise. There are many unemployed who in desperate straits are willing to work at a lesser rate for cash-in-hand earnings. Most will not pay tax and many will claim social assistance and unemployment benefit. Others will be supported by the family network, and often work for financial handouts within the family stable. The threat of being caught won't easily spook them because so many are circumventing the system already and the majority of Spaniards would applaud rather than castigate them for their actions.