This is mostly about massive payments to those unemployed. Pay people not to work and they won't. This is coupled with regulations which make it very dangerous (in terms of cost) for firms to take on new workers. And all mixed in with the downside of the business cycle.
(Chart via Zero Hedge)
Here is the link is anyone is interested: http://www.zerohedge.com/news/2013-04-25/spanish-unemployment-tops-record-rising-fastest-rate-year
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