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Employment holds strong in summer
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The labour market continued to show notable strength half way through the summer, if we are to go by available indicators. On the one hand, according to National Accounting, employment measured in jobs equivalent to full-time work rose at a rate of 3.2% in the second quarter, thus improving on figures for previous months. In addition, figures for registrations with Social Security (now for August) also showed a favourable level in spite of the bias introduced by the process of granting legal job status to foreign workers which began in February.
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Construction employment up 8%.
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The strength of employment as shown by National Accounting was based on the extraordinary growth which continues to show up in construction at more than 8% year-to-year for the third consecutive quarter. On the other hand, industry is showing notable weakness, which may be partly explained by the effect of foreign competition in certain economic sectors. Finally, services continues to display firm growth, particularly in the public sector, given than in terms of full-time work growth stood above 3%. Market services, on the other hand, showed something of a slowdown, mainly due to the relative rise in part-time work.
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In the case of Social Security, registrations were down in August as has been normal in that month in recent years but less sharply than last year. This meant that the increase in registrations rose to 5.2% year-to-year, a figure greatly biased upward by the increase in foreign workers having their status made normal. If these registrations (352,522 to the end of July) are discounted, seeing that in fact they do not constitute new employment but merely the surfacing of already existing work, registrations would have grown by 3.2%, a figure which coincides with that supplied by National Accounting.
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Foreign workers make up more than 40% of new employment.
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Immigration continues to be the key for meeting the existing demand for labour. If we exclude those who have just gained normal work status, the growth in registrations among foreign workers goes above 21% as against 2% for Social Security registrations by native Spaniards. This means that 41.6% of new registrations between August 2004 and 2005 were of foreign workers and that, as a whole, these now make up 9.1% of total registrations with Social Security, nearly three points more than in August last year.
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This favourable state of affairs is also confirmed by hirings registered at employment offices. In the first eight months of the year these hiring contracts rose by 2.6%, with permanent contracts showing up more strongly than temporary contracts in spite of the fact that the latter were in the majority.
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Registered unemployment continues downward trend
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The good state of the labour market is also seen in registered unemployment figures. In August, in spite of rising as usual this month, the number of persons registered at employment offices rose less sharply than in 2004. As a result, registered unemployment (2,019,110 at month-end) was 1.5% lower than last year.
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August increase seasonal in nature and makes no change in downturn.
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In any case, the cumulative balance for the year did not turn out as favourable as that for the first eight months of 2004, the best for the current decade. The notable increase in farm unemployment and the performance in industrial unemployment, with a much lower decrease than last year, lay behind most of the difference. In construction and services, the cumulative decrease in unemployment came close to slightly more than last year but failed to reach that figure.
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By autonomous community, the situation is relatively uneven with some regions showing levels of registered unemployment well below those in 2004 alongside those showing a similar or decidedly worse state. Notable in the first group were Madrid Community, the Basque Country, Cantabria and Extremadura. At the other end of the scale, that is to say, with relatively higher unemployment, came the three central regions of the Ebro Valley and Castile-La Mancha, all of which are noted for a relatively large farm sector.
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Containment of labour costs
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Wage costs contained with growth below inflation.
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According to the quarterly wage cost survey, the average increase in total wage cost per person per month broke with the path of moderation shown over the past year to stand at 3.4% in the second quarter of 2005, nine decimals more than in the previous quarter. Nevertheless, the uneven performance of this statistical series would suggest waiting for further figures before pointing to a change in trend. For example, the different placing of Easter Week in this year’s calendar may have had an effect on these results.
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Wages rise less in construction and industry.
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More credibility should be given to the figures from National Accounts which point to lower pressure from wage costs than indicated by the quarterly wage cost survey. As a result, average wages per worker showed an increase going down to 2.7% in the second quarter of 2005, eight decimals less than in the same period in 2004. This trend to containment is spread over all sectors but is especially strong in construction and industry, sectors where foreign workers represent a notable proportion of all new employment. Services show a similar trend but not as strong, along with wage increases well above those in non-market services compared with those in market services.
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