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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.
Five million migrants arrived during Spain's decade of heady economic growth from the mid-1990s, finding work on mushrooming construction sites, in shops or as domestic helpers.
There are no official figures but Carlos Gomez Gil, head of the Immigration Observatory at the University of Alicante, estimates as many as 300,000 could have lost their papers during the economic crisis.
"This novel, extraordinarily rapid and profound crisis is going to have a big effect on Spain's recently arrived immigrant population, which still hasn't had time to settle down here and is still politically, socially and economically fragile," Gomez Gil wrote in a recent paper.
"This is the first crisis Spain has ever experienced with an immigrant population," he said.
Things were very different when Wilson first came in 2003. Work was easy to find in a construction boom, for wages many times higher than back home around the mangrove swamps of Guayaquil.
"There've been ups and downs, it hasn't been easy, but I've got used to it here," said Wilson, 29, who prefers not to reveal his surname for fear of provoking the immigration authorities. He expects his visa renewal request in July to be refused.
Like Wilson, a large proportion of the newly illegal migrants are male manual workers from Latin America or North Africa -- cast-offs from the building sites.
"About 40 percent of immigrants have only been educated to primary school level, and, as those in the construction sector lose their jobs, there is a big problem finding them new employment," according to Josep Oliver, professor of applied economics and the Autonomous University of Barcelona.
He sees a tougher future for such unskilled migrants in a sustained period of stagnation, where the main hope for economic growth is in industries such as renewable energy that require a more highly trained workforce.
"If the government does not provide continual retraining and education they run the risk of becoming a structurally unemployed population," he said.
Of course, Spain could never have had its property boom without these foreign workers. They were also a vital ingredient in the cycle of speculation and credit that inflated construction and related activity to an unsustainable 25 percent of its gross domestic product.
Besides building the houses, migrants bought many of them too, contributing to the country's 600 billion euros in outstanding mortgages. Spanish banks funded many of these by issuing bonds in Germany.
Despite the speed with which Spain became an ethnically mixed society, it has so far avoided the tensions associated with immigration seen in other European countries.
"One of the principal forces for the integration of foreigners into Spanish society is work," said Marin.
The Socialist government held an amnesty for 600,000 illegal immigrants in 2005, granting them visas if they could show proof of employment. And like left-of-center politicians elsewhere in Europe, Prime Minister Jose Luis Rodriguez Zapatero welcomed immigration as a way to both to make Spain more tolerant and diverse, and to ensure an aging population would be able to continue to afford its social security system.
The government once spoke of how immigration could increase Spain's population by 50 percent to 66 million.
Now unemployment is around 18 percent -- and 10 percentage points higher among foreign workers -- it is changing its tune.
It has drastically cut back on working visas, tightened rules on family reunification and offered money to migrants wanting to leave Spain. In a stark departure from its previous talk of diversity, the government put up billboards featuring dark-skinned people and the question "Thinking of going home?"
The climate has also hardened outside Madrid.
In January, the Catalan town of Vic decided to restrict access by illegal immigrants to healthcare. While it was criticized by the government and forced to back down, several leading members of Spain's conservative opposition came out in favor of the move.
But while men with low levels of education are struggling, female immigrants in service industries and as housekeepers are finding their jobs resilient, according to Joaquin Aguilar of the Spanish Commission for Assistance to Refugees (CEAR), a non-governmental organization that helps migrants find work.
"In 2007, we used to see 35 percent men and 65 percent women, and now it's the other way round. It's basically because of the construction effect, because the African or Latin American men who worked in construction and didn't have any other skills have lost these jobs," he said.
He added that he was hearing anecdotal evidence of rising domestic violence among immigrant communities as men struggled to come to terms with the new economic reality.
Cleonice da Rocha, a middle-aged Brazilian woman who came to Spain to work as a housekeeper, said her husband had gone back to Brazil after failing to get work.
After renewing her visa at government offices in Madrid overlooked by the barbed wire fences of a psychiatric hospital and the ruins of a notorious Franco-era prison, she said her job meant she was staying in Spain with her young daughter.
"I want to go back too," she said.
Reporting by Jason Webb; Editing by Sara Ledwith