Research Dept. News
|
|
|
|
Monthly Report, num 349 - September 2011
|
|
|
Spain: overall analysis - Labour market
|
|
|
|
|
The favourable season provides some break
|
|
The pace of recovery in the labour market comes to a standstill.
|
|
The outlook for the job market in the third quarter is not very encouraging, as highlighted by the most recent data for July. In fact, although the total number of people registered as employed with Social Security increased this month by 50,773, this rise was quite a lot lower than expected and worsened by one tenth of a percentage point, for the second month in a row, the rate of decrease in registered workers to 1.2% year-on-year. The stagnation and even reversal of the reactivation in employment becomes even more evident when we look at data adjusted for seasonal effects, as this rise in the number of employed becomes a fall of close to 35,000. Over the next few months, employment is expected to fall again, coinciding with the end of the summer season and the slowdown in the progress being made by the world economy. Should this trend continue, the year will very probably end with a decline in employment of at least 0.8% year-on-year.
|
|
|
|
Similarly, registered unemployment revealed an adverse trend in July as, although it fell by 42,049 people, the year-on-year growth rate grew substantially for the second month in a row, to 4.4%. This suggests a slowdown in the improvements made in unemployment, which saw its year-on-year rate of change rise again.
|
|
|
Employment contracts decrease in July, including temporary.
|
|
Another sign of deterioration in the labour market in the second half of the year can be seen in the figures for the number of contracts recorded. In July, not only did permanent contracts fall, as has been happening most months since the start of the recession, but also temporary contracts. The latter had grown significantly in the period May-June, boosted by the tourist season, and their decrease now signals the end of this seasonal effect on the labour market.
|
|
|
|
July's figures therefore show a significant halt in the recovery which, although weak, had taken place during the period April to June. The employment data from the Labour Force Survey (LFS) for the second quarter of the year also show a slight improvement taking place during the second quarter, but the rate is still very slow.
|
|
The LFS confirms job creation in the second quarter but with a strongly seasonal component.
|
|
According to the flash figures from the National Statistics Institute (INE), the Spanish economy grew by 0.2% in the second quarter compared with the previous period. After the 0.3% recorded in the first quarter, this rate shows a slight weakening in economic activity, moreover within a context affected by the worsening of the sovereign debt crisis in the euro area. In these circumstances, employment stabilized in quarter-on-quarter terms with an increase of 151,400 people, reducing the year-on-year drop by four tenths of a percentage point to 0.9%. This was due to the good performance by employment in the services sector, boosted by tourism, which increased notably in this period. The secondary sector also contributed to rising employment, albeit to a lesser degree.
|
|
|
|
Both the LFS figures and those for registered employed, particularly in the breakdowns by sector, point to the improvement in employment in the second quarter having a markedly seasonal nature and, when this favourable context disappears, we will more than likely see falls in the total number of employed.
|
|
In the second quarter of 2011, private sector employment is down 2.0% year-on-year while public employment increases by 4.3%.
|
|
Another sign that the labour market is still very listless and will probably get worse in the third quarter is the trend in the number of employed by employee. The private sector employs the largest number of people and better reflects the dynamism of the economy, so that its trends are very important for gauging how the labour market is performing. Although employment in this sector increased during the quarter, in year-on-year terms it continued to fall significantly. On the other hand, public administrations and corporations continued to create jobs, a somewhat disconcerting fact considering the government's commitment to cut spending. In this respect, public sector employment is not expected to keep up this pace of growth over the coming months. This last factor, together with the already mentioned end of the tourist season, augurs a drop in employment for what remains of the year. The only possible means of escaping this scenario would be a very strong push from sectors oriented towards exports, which does not seem very likely given the slowdown in international economic activity.
|
|
|
Unemployment stands at 20.9%.
|
|
With regard to unemployment, the rise in the total number of employed in the second quarter translated into a small drop in the unemployment rate to 20.9% as the labour force also grew at the same time, this being rather unexpected given the very moderate growth rates at present. The trend in unemployment has been quite disparate among the different population segments. It should be noted that long-term unemployment will continue to rise, already accounting for 47.8% of the total unemployed. This figure is quite negative as studies show that, all things being equal, this group has a substantially lower possibility of finding employment compared with other unemployed people.
|
|
|
|
In summary, given the latest figures on the labour market and the prospect of a certain slowdown in the world's economic activity, employment is only expected to progress very gradually. Employment is very unlikely to pick up again before 2012.
|
|
|
You can susbcribe now to be nofified by email every time the Monthly Report is updated in the internet.
|
All documents are in Adobe Acrobat format (PDF).
To view a document in PDF format you need the Adobe Acrobat Reader. If you don’t have it already loaded on your computer, you can donwload it now.
|
|
Direct link to the Research Dept. in your mobile
We'll send you a free SMS with the link
|
