Research Dept. News
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Monthly Report, num 338 - September 2010
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Spain: overall analysis - Labour market
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The Labour market is leaving the worst of the crisis behind it
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First rise in employment in two years.
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According to figures from the labour force survey (LFS), in the second quarter the number of employed people rose by 82,700 compared with the previous quarter, the first rise in two years, totalling 18,476,900 and thereby easing its year-on-year rate back to 2.5%. However, although this rise in employment is good news, the current fragility of the Spanish economy's recovery means we must qualify our assessment of the figures and wait for the results from the next few surveys before endorsing the trend as positive in terms of creating jobs.
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In fact, July's figures for the number of people registered as employed with Social Security showed a rise of 65,541 but, once seasonally adjusted, this becomes a fall of about 27,000 registrations, so we can't say that job losses have actually come to an end just yet. However, it should be noted that this fall is lower than those recorded in previous months and that the year-on-year drop has eased back to 1.6%, so a change in trend is probably a bit closer.
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Returning to the LFS, in the second quarter of 2010 we can see that new jobs were concentrated in the male segment, while women continued to lose employment, unlike in previous quarters when men were the most severely affected. This is mainly due to the male predominance in the construction industry, a sector that, for the first time since the recession started, saw a rise in its number of employed, namely 2.2% quarter-on-quarter. In the second quarter jobs were also created in industry, 0.7%, and in services, 0.6%. However, all sectors continued to post negative figures compared with last year.
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Public sector employment falls for the first time in the second quarter.
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Regarding employer type, the LFS reflects the effects of public sector provisions aimed at reducing state-employed workers, as in the second quarter no further jobs were being created in this sector. So, while the private sector generated 85,500 jobs, the public sector reduced its number by 2,800 workers. In fact, since the recession started, the positive figures for the public sector have contrasted sharply with the extent of job losses in the private sector.
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Unemployment increases and stands at 20.1%.
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On the other hand, the figures also show that part-time work has had a boost over the last twelve months, as this kind of work saw a 2.0% year-on-year increase, unlike the 3.1% drop recorded for full-time employment. The number of part-time jobs continued to grow at a faster pace throughout this second quarter, increasing the ratio for this kind of employment by two tenths of a percentage point, to 13.5%.
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In terms of geographical area, in the last year jobs were created in the Basque Country and in Navarre, so that these two communities are probably pioneers in the job market's recovery. The rest of the communities posted negative annual rates, particularly the Community of Valencia, Galicia and Asturias.
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The labour force estimated by the LFS rose by 115,500 people in the second quarter, a higher figure than the overall growth in employment and therefore leading to a larger number of unemployed, now totalling 4,645,500. As a result, the unemployment rate stood at 20.1%.
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In regional terms, the highest unemployment rates could once again be seen in the Canary Islands and Andalusia, with figures above 27.5%, while at the opposite end of the scale was the Basque Country with the lowest rate, namely 10.4%.
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The rise in unemployment is concentrated among those younger than 25.
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It's also important to note that unemployment continued to rise more sharply among those segments of the population at greater risk. In fact, the number of families with all their members out of work increased last year, reaching a total of 1,308,000. Higher unemployment was also concentrated among those younger than 25, with a rate of 42.1%.
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With regard to unemployed people registered with the employment offices, the figures for the month of July were somewhat more encouraging, as shown in the above graph, suggesting that rising unemployment is close to its peak as, for the first time since the crisis began, there has been a fall in the total number of registered unemployed, once seasonally adjusted, of around 11,500. However, there is still the risk that, in the second half of the year, the end of the tourist season and the application of the measures contained in the austerity plan will reverse this recovery.
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Expenditure on unemployment payments slows up.
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As a result of the trends in unemployment, expenditure on unemployment benefit rose 1.2% year-on-year in June, a much lower rise than the 62.9% recorded at the end of 2009. This slowdown in expenditure is mainly due to the fact that many of those receiving benefit ran out of their entitlement and went on to receive a subsidy payment, which is lower. Nonetheless, the cost of these payments rose to 2.583 billion euros. Within this context, the Spanish cabinet's approval to extend the aid of 426 euros to those unemployed people who receive no benefit or subsidy for six additional months as from 16 August will help to increase expenditure on this item.
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Another consequence of the rising unemployment in the last year has been the higher labour costs of firms resulting from redundancy payments, as shown by the figures from the annual labour cost survey carried out by the National Institute of Statistics. Consequently, while net labour costs were up 3.5% in 2009 compared with the previous year, lay-off costs grew by 42.7% during the same period, so that their contribution to the total cost went from 1.14% to 1.57%.
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