Third quarter Spanish unemployment - part 1

Third quarter Spanish employment statistics were released this morning. Headline stuff from the EPA had

1). A net quarterly increase in employment of 151,000 persons. Annual was positive 274,000;

 2). By sectors - services +109,000, industry +72,000, agriculture -73,000;

3). Number of unemployed dropped by 195,000 quarterly and 515,000 over 12 months.

4). The unemployment rate is 23.67% versus 25.65 a year ago.

5). The labour force has decreased by 241,000 persons over the year.

Here's a couple of things that caught our eye in the detailed report.

In Spain, new hires normally start work on what is known as a 'temporary' contract. Typically of three or six months duration, they imply fewer obligations on the part of the employer. There is a legal limit to the number of times that temporary hires can be renewed without a change in status, so in an environment of increasing economic activity, you can expect a one year delay in the conversion of these to permanent - and that's exactly what we're seeing here. Temps bottomed in Q1 2013 and permanent 12 months later. Were an improved outlook not the case, companies would be using a 'revolving door' approach to manage their staffing requirements with temporary hires.








One of the curiosities of the Spanish labour market has been the different effects the dramatic downturn in employment has had on men and women. Male employment and labour force participation have both dropped off. But in the case of the female population, the number active workers and job seekers has increased notably. In the case of women over the age of 40, there are in fact more working than were even in the labour force in 2008. Over the last two quarters, men (although certainly not young ones) have been the principal beneficiaries of improved opportunities. Normalization, in a word.

And lastly:

The continued drop in labour force participation rates is primarily attributable to the emigration of foreigners of working age. But, aside from the effect of natural demographic changes resulting in retirement coming into play as well, there is also the curiosity we see in the data, which we've been following for about two years, on the left. The quarterly increments in male job losses in the 16 to 29 age group since 2008 are almost exactly offset by higher numbers of women over 40 entering the ranks of the working and job seekers. Maybe a little cherry-picked for effect, but we have no doubt this reflects the Spanish family mutual support culture. Junior loses his job and mom starts knocking on doors.

You can expect continued labour force declines into the future as the economy improves.




Charles Butler