The mounting cost of Spain's new illegal underclass

Mon Feb 22, 2010 7:08pm EST
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By Jason Webb

MADRID (Reuters) - Wilson, a tiler, worked illegally for six years before getting his papers in October. Now he's lost his job he has a choice: go back to living illegally in Spain or leave the country.

With a son back in Ecuador, he says he will probably return home to Guayaquil rather than scrape a hand-to-mouth living from employers who dodge social security costs by giving him work under the table. But most migrants, faced with hardship in Spain or worse in places like Senegal or Bolivia, seem to be choosing the former.

"What lots of them do is to stay in Spain, working in the black economy," said Vicente Marin, a lawyer specializing in immigration in Granada, southern Spain.

Spanish visa rules often deny renewal requests if migrants become unemployed and fail to make sufficient social security payments. So a side-effect of the economic contraction that has continued for seven straight quarters has been the growth of an illegal underclass.

Beyond boding ill for social harmony, this could also impose an extra financial burden, draining tax revenues and productivity from a country whose weak competitiveness and high unemployment have already lured speculators betting against its government debt.

The black economy, estimated to account for almost a quarter of Spain's gross domestic product, costs the government up to 25 billion euros a year in lost tax revenue and also traps workers in low-skill, low-pay occupations.

Already, large numbers of migrants survive by providing labor for cash in hand, no questions asked. You often see little hand-written signs posted around Madrid offering to refit your house or fix your plumbing for bargain-basement prices.

Besides acting as a safety net for migrants banned from legal jobs, the black economy reinforces barriers between recent arrivals and native Spaniards.   Continued...