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Economic Affairs, Employment and Social Security


Sunday 31 December 2017

​Labour Market in Spain

Since the transition to democracy, the Spanish labour market has been characterised by its high level of structural unemployment that increases in periods of crisis. While in economic boom times the unemployment rate has never fallen below 8%, in periods of economic crisis it has risen as high as 26%.

The Spanish economy has now enjoyed almost four straight years of growth, with a 0.9% rise in GDP in the second quarter and 3.1% over the last 12 months, according to the National Accounting figures published by the National Statistics Institute. This figure is one tenth up on both the quarterly and annual rates, thus maintaining the growth differential in favour of Spain compared with the Eurozone average.

The labour market has been performing dynamically: since the start of the recovery in 2014, 1.5 million jobs have been created and unemployment has fallen by almost 1.7 million people, while the active population has fallen by some 190,000 people.

Labour Force Survey

Employment, expressed in full-time equivalent jobs according to the figures estimated by the Bank of Spain, has increased by 2.7% year-on-year, which represents the creation of 460,000 jobs in the last year, at a rate that is 0.4% higher than the rate recorded in the Labour Force Survey. This increase in employment has been accompanied by a small improvement in productivity, which rose by 0.3%, and a fall in nominal unitary labour costs, which have fallen by 0.2% to stand at 0.8% below the implicit price deflator of the economy.

As regards inflation, after 10 straight months of falls, it is now on the rise. The Consumer Price Index (CPI) rose in September 2017 by 1.8% year-on-year, the same rate as previously announced by the National Statistics Institute (Spanish acronym: INE) at the end of last month, and 0.2% higher than in the month of August, according to the figures published by the INE. This trend can principally be explained by the increase in the prices of non-prepared food, after a fall in August, and, to a lesser extent, by the rise in services and non-energy industrial goods (NEIG), partially offset by the slower rate of growth in energy product prices and prepared food. In month-on-month terms, the CPI has risen by 0.2% in September 2017, compared with a zero rate of change in the same month of 2016.

In the last year as a whole, the number of people out of work has fallen by 660,400 (14.4%), while the total number of unemployed fell below 4 million to 3.91 million. The unemployment rate has fallen to 17.22%, the lowest since the start of 2009 and almost three points less than a year ago. Employment has risen by 375,000 workers in the second quarter, and by 512,300 in the year as a whole, which means the annual rate has risen by more than half a point to 2.8%.

All jobs created in the quarter are full-time jobs and most of them are in the private sector. The number of people in work has risen to 18.81 million, the highest figure since 2010.

The most important aspects to highlight - figures from June 2017 - are the following:

  • Employment fell by 69,800 people quarter-on-quarter, to stand at 18,438,300 people in work. Unemployment rose by 17.200 people to stand at 4,255,000 people, while 52,600 people left active employment, to leave 22,693,300 people at a working age.
  • In seasonally-adjusted terms, the trend has been positive. Employment has risen by 0.7%, while it rose by 0.45% in the previous quarter.
  • In year-on-year terms, the job creation trend has consolidated. Employment has increased by 408,700 people, at a rate of 2.3%, similar to the previous quarter.
  • Unemployment recorded a significant reduction, with 536,400 fewer unemployed, down by 11.2%, at a faster rate than in the last three years.
  • Territorially, employment has increased in three autonomous regions while unemployment has fallen in five. In year-on-year terms, employment has increased in 13 autonomous regions, while unemployment fell in all of them, headed up by Andalusia and Catalonia.
  • Over the last year, the number of people of a working age has increased. 1,138,700 people joined the labour market, 9,200 more, while 1,182,700 people left it, 9,900 more than a year ago. In parallel, the number of people leaving unemployment fell by 1,449,800, 44,800 fewer than a year ago, while the number of people joining the unemployment queues also fell, by 1,478,600, 87,000 fewer than a year ago.
  • The total number of households has risen to 18.5 million. This increase has also taken place in the number of households with all active members out of work, by 6,900, to stand at 1,394,700, whilst the number of households with all active members in work has dropped by 51,700, to stand at 9,832,000 households. However, the trend is positive on a year-on-year basis, with 216,200 fewer households with all their active members out of work and 321,600 more households with all their active members in work.

Youth Employment

International Youth Day reminds us that youth employment is a priority for all our policies and of the need to continue working to achieve this. Accordingly, measures have been implemented such as the Youth Entrepreneurship and Employment Strategy (Spanish acronym: EEEJ) - the result of dialogue with social stakeholders and regional governments - and the Youth Guarantee, which is carving out positive results for this group.

Since the government implemented the Youth Entrepreneurship and Employment Strategy in 2013, which subsequently incorporated the Youth Guarantee, job opportunities have been created for 2,174,536 young people. Specifically, 1,423,799 young people have benefitted from the EEEJ, while 750,737 young people have signed up to the Youth Guarantee.

Employment among young people under the age of 25 is growing at a rate of 9.56%, more than double the national average, according to the latest figures for Social Security contributors. Consequently, the threshold of 1 million young people under the age of 25 in work in our country has now been reached again, something that had not taken place for six years.

In turn, the Labour Force Survey figures for the second quarter of 2017 show that the unemployment rate among young people under the age of 25 has fallen by 17.4 percentage points to stand at 39.53%. In other words, it has fallen below 40% for the first time since the end of 2009. The unemployment rate of this group has fallen by almost 7 points in just the last year.

The figures published in July 2017 by Eurostat highlight that Spain is heading up job creation among young people in the Eurozone and throughout the EU. In fact, 20% more jobs have been created in Spain than in Italy, 50% more than in France, and double the number in Germany.

Despite this upward trend, the government recalls that there is still a lot of work to do, which is why it continues to work at round-table talks with social stakeholders, regional governments and parliamentary groups so that this joint effort increasingly leads to more and better job opportunities for our young people.

Improve the employability of young people and facilitate their insertion in the job market

The Youth Entrepreneurship and Employment Strategy provides for actions to improve the employability of young people, facilitate their insertion in the job market, promote entrepreneurship and improve their situation within the labour market. This contains 100 measures to foster their insertion in the labour market, either as employees or through entrepreneurial activities.

The Youth Guarantee is framed within the Youth Entrepreneurship and Employment Strategy and provides for a raft of measures adapted to the different profiles of young people. The measures are structured around four main pillars: improving intermediation, enhancing employability, stimuli for recruitment and fostering entrepreneurship.

PREPARA Programme

This is a protection mechanism that seeks to help those unemployed people who have run out of unemployment benefits or subsidies to find a job. The programme is justified by the situation of the Spanish labour market and is made up of a series of work insertion actions managed by the Public Employment Services of the regional governments or through the State Public Employment Service (Spanish acronym: SEPE) in Ceuta and Melilla, together with a monthly financial benefit, by way of subsidy, paid out by the State Public Employment Service.

At present, the government is working to provide continuity to this programme. In fact, this has been extended on 12 occasions to improve benefits to those who most need them - the long-term unemployed with family responsibilities. The accumulated figures for the Programme show that almost 1 million people (852,456) have benefitted from at least one of its editions. 80% of them - 751,639 - since 2012, received the higher subsidy of 85% of the Public Income Index (Spanish acronym: IPREM) (452 euros until 2017 and 457 under the General State Budget for 2017).

More, better quality jobs

Spain has bedded down its leading position in job creation in Europe. Over the last year, Spain has created 25% more jobs than in the second leading country in the EU to create the most jobs, which is Italy, and 49% more jobs than in Germany.

The government is working together with the social stakeholders through the Job Quality Round-Table, which has led to permanent employment contracts rising by 12.5% more in the first seven months of 2017 than in the same period of 2016.

Full-time permanent employment continues to rise, and it is doing so at a rate of 14% year-on-year. 93.3% of jobs recovered are full time, while only 6.7% of jobs recovered are part time. In terms of female employment, the number of women in work has now recovered to figures seen before the crisis.

New record for net Social Security revenue

Employment is directly linked to the improvement in revenue collected under the Social Security system. Over the last 12 months, six new jobs have been created for each new pension, compared with three back in 2011. In August 2017, for the first time in any given month, the net income of the Social Security system exceeded the threshold of 10 billion euros (10,097,820,000).

Fight against fraud

The agreements reached between the Employment and Social Security Inspectorate and the regional governments have led to more than 65,000 illegal jobs (66,504) being uncovered until August 2017. In total, 469,504 illegal jobs have been uncovered since 2012, as well as 6,427 fictitious companies.

As regards permanent employment contracts, more than 60,000 (62,876) illegal temporary contracts have been converted into permanent contracts. In total, 309,876 illegal temporary contracts have been converted into permanent contracts since 2012.