27/10/2014
Valentín Bote is general manager of Employment Strategy and Development of the Community of Madrid. Lecturer of Economic Theory, Autonomous University of Madrid.
The National Institute of Statistics (INE) has just published the results of the Labour Force Survey (LFS) for the third quarter of this year. The headlines are known by all: employment grew by 151,000 people in the quarter and unemployment fell by 195,200 people, resulting in a drop in the 24% unemployment rate for the first time since the end of 2011, in particular down to 23.67%.
The good news of the quarterly data are also based on a much more interesting context, that of inter-annual variation, which enables us to leave behind any temptation to talk about the seasonality of the third quarter in the Spanish economy and where two realities of the labour market are actually compared: the current one and that of four quarters ago.
In fact, inter-annually speaking, the LFS is unequivocal: occupation has increased by 274,000 people. People who find this information annoying and try to detract from its importance generally use two types of arguments.
The first argues that the employment growth is not due to business growth, but that what is actually happening is that the existing employment is being 'distributed' and part-time employment is thus growing significantly. However, this argument is simply false: in the last year the number of full-time employment has increased by 263,200 (1.8% inter-annual growth), while part-time employment YOY has grown by only 10,800 (0.4% increase).
The second argument is that the employment created is 'precarious' because it is temporary. Beyond the question of what is actually more precarious, if being unemployed or working on a temporary contract, when analysing the data you can also see that the number of employees with permanent contracts in Spain has increased in the last year by 134,600, almost half of all annual job creation.
Of course, the data analysis cannot ignore the very strong inter-annual unemployment reduction that the LFS is measuring. In YOY terms, the survey indicates a fall in unemployment of over half a million people, specifically 515,700. This sharp drop in unemployment means that the unemployment rate has fallen to 23.67%, a figure that needs to go back to 2011 to find its match.
To try to detract from this figure we repeatedly hear the argument that unemployment is decreasing because the unemployed are leaving Spain to look for opportunities elsewhere. This argument is more complex and needs to be refined with data.
The working age population, according to the LFS, has fallen in the last year. But the decline has been of only 74,100 people. Among foreign nationals, the working age population has declined by 223,300 people. Therefore, the first conclusion is that in the last year in Spain, the working age population of Spanish nationality has increased by nearly 150,000 people. And as for the workforce, reduction in the last year amounted to 241,700 people, of which more than 90%, a total of 222,400, were foreigners. Therefore, what we are actually witnessing here is that the foreign population is leaving Spain as a result of a serious problem of unemployment (the unemployment rate of the foreign population is still 32.87%), but it does not correspond to a flight of the Spanish population out of desperation.
In short, the LFS has shown good news to the country and its figures have helped consolidate the reality of the economic recovery and of the labour market that has already been taking place for several quarters.