This Week's Focus: Lights and shadows in the employment data

This Week's Focus: Lights and shadows in the employment data

Anchor

The latest data on unemployment in Spain referred to May 2016 indicate a decrease in the number of unemployed, bringing the number of unemployed below 4 million people.

The evolution of unemployment in Spain since the beginning of the crisis has meant a considerable increase in unemployed people with a maximum slightly over 5 million unemployed in February 2013, from just under 2 million at the beginning of the crisis, in 2008.

Summer Seasonality

Moreover, unemployment in Spain suffers from a well known to those skilled seasonality, and coincides with the peak of the tourism sector (from Easter to summer) and retail sales (Christmas). Therefore, the decrease in unemployment in May is common and not at all is symptomatic of a trend improvement in unemployment, unfortunately.

Precarious Trend

The worrying data is the destruction of jobs with employment contract of indefinite duration while creating jobs is concentrated, by far, in part-time jobs. Thus, the loss of nearly 3 million permanent jobs is evident since late 2007 while only 400,000 jobs have been created part-time from the same year.

So, it is good that unemployment is reduced, because it has positive effects for people who find employment and the economy in general. However, trends in the Spanish labor market show some worrying aspects for the future:

  • Less stability of the jobs created, with the added uncertainty for the employee, who has no medium-term visibility on their employment situation and may postpone decisions on consumption and housing investment.
     
  • Lower purchasing power and thus lower propensity to consume new hires, with effects on economic growth.
     
  • A decline in the activity rate. This indicates that some long-unemployed people have stopped actively looking for work, so the fall in unemployment does not necessarily mean more people working. This also has adverse effects on growth.

In conclusion, an improved economy to help increase the number of people employed in conditions of employment stability and proper wages, at the same time the competitiveness of companies is maintained and can be maintained properly it is desirable protection systems social. An equation difficult to solve with the current structure of the Spanish economy and its present and future demographics, unless drastic changes.