I agree with you 100%.When countries have to compete against each other to attract multinationals they will bargain down to the bottom line. The alternative isn't necessarily to create more public sector jobs, but to invest in home-grown industries whose workers have a stake in their success (as you described earlier). Give the tax breaks to them, not to the fly-by-night multinationals.
Problem is however.....which companies are willing to risk investing in this climate and with the threat, in Spain, of a bunch of inexperienced radicals hanging over them?
Which takes us back to Chopera's point: yes, 'flexible' labour markets if left unregulated can be poison for working people. But no-one starts a business for purely altruistic reasons and although tax breaks help, a more realistic approach to labour laws is needed.
In theory, once a private business is up and running, making a profit and putting a reasonable amount into the business for expansion, the knock-on effect on the local economy should generate more jobs.
But you've got to get your 'wealth-creators' both large and small willing to invest in the first place and to do that you need to have government at all levels that is business-friendly.
If I were a businessperson looking to invest, I certainly wouldn't choose Greece, for obvious reasons. But I would think twice about investing in Spain too in the current climate where inexperienced radicals are making uncosted promises and as far as I am aware have shown no signs of the need to attract wealth creators in order that they may be able to fulfil their promises to help the poor.