Spanish labour market slows down

by Lorraine Williamson
Spanish labour market

MADRID – The economic crisis reached the Spanish labour market at a very unexpected moment: 7,366 jobs were lost in the country in the middle of the summer. That has never happened in the 21 years since data has been kept on this. 

Unemployment also rose by 3,230 people in July. That hasn’t happened since July 2008, when the great financial and economic crisis started after the real estate bubble burst. Despite the very slight increase in unemployment of just 0.1%, this marks the end of a series of 16 consecutive months of decline (since March 2021) in unemployment. 

This trend reversal also anticipates the difficulties to be expected in this regard in the coming months. With the end of the summer campaign, which has traditionally been very good for employment, and given the uncertainties surrounding the war in Ukraine. In addition, the threat of cuts in Russian gas supplies hangs over the European winter and meanwhile inflation is rampant. 

The number of new jobs is stagnating and the number of social security members suffers an unprecedented contraction in July. Characterised by the loss of 115,528 social premium payers in education. If the seasonal effect is corrected, new members will be added (9,104), which means that jobs have been created in Spain for 15 consecutive months. However, this is the smallest increase since December 2020. 

Despite everything, Spain retained an average of 20,340,964 affiliated employees and 20,111,141 affiliated employees in July without the effects of seasonality. That’s the second-best figure in the entire historic run after June’s record. 

But after the euphoria surrounding the good numbers of the EPA Active Workforce Survey for the second quarter released five days ago, the labour market recovery after the end of restrictions due to the pandemic seems in sight. 

Symptoms of Spanish labour market exhaustion 

“The economic situation is starting to be felt in the Spanish labour market. Inflation and the consequences of the war in Ukraine mark an uncertain and complicated scenario,” Labour and Social Economy Minister Díaz acknowledged on Tuesday. After the publication of the EPA, she already let slip that there were signs of a slowdown in July. Moreover, stagnation is noticed in almost all economic sectors and especially in the service sector. Here, the unemployment rate rose by 11,237 people in July. 

Looking at the affiliation with the Spanish social security, it can be seen that the catering sector with 22,980 employees counted half the number in June. In addition, the extra jobs in the care sector and trade, 51,444 and 39,259 respectively, cannot compensate for the 11.15% drop in education. Many teachers’ contracts were lost here at the end of the school year. Unemployment also increased, albeit slightly, in agriculture and construction. It only fell lower in the industry (-7,899). 

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Decrease in youth unemployment 

On the positive side, youth unemployment in Spain continues to fall in July. Up to 12,604 people under the age of 25 left the SEPE lists (-6.26%). The total number of unemployed in that age group is now 188,605 which is the lowest figure in the entire historical series. On the contrary, unemployment rose by 0.65% among the over-25s, with 18,555 more unemployed. 

More women than men lost their jobs 

The main victims of the deterioration of the labour market in July are women. While male unemployment is slightly down, with 1,343 fewer jobseekers compared to June, there are 4,573 more women unemployed. The total number of women out of work is 1,728,388 and 1,155,424 men are unemployed. 

Looking at the past year, employment for women has grown, with 428,000 affiliates. That is more than the 366,000 affiliates in the past twelve months. 

Contracts 

In July 113,000 fewer contracts were signed than in June. The share of temporary contracts also increased again to 58.6%. According to data from the Ministry of Inclusion, Social Security and Migration, open-ended contracts made up 72.5% of the total in July. That is almost 10 points more than a year ago, while the number of temporary contracts fell to 18.9%. Before the pandemic, this category was still more than 30%. 

Regional inequality 

There are quite large differences in the labour market in July per region. Job creation is concentrated in regions such as the Balearic Islands (with 13,860 affiliates, an increase of 2.34%); Catalonia with 13,306 (0.37%), or Cantabria, with 4,267 more (1.88%). 

At the other extreme, the Madrid region, in absolute terms destroys the most jobs, with 21,606 fewer affiliates (-0.63%). This is followed by Andalucia, with a decrease of 19,992 (-0.61%). La Rioja loses 2,188 jobs (-1.61%). 

Unemployment decreases mainly in Cantabria and Asturias by about 2.5%. Valencia and Andalucia are the regions where unemployment fell by 2,937 and 2,263 respectively. 

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