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Thursday, July 25, 2013

Let's have a look beyond the (rather encouraging) headline figures on Spanish unemployment

The Spanish National Statistics Institute (INE) has this morning published its latest unemployment data. The headline figures look encouraging. In the second quarter of 2013, the number of unemployed people went down by 225,200 - and is now slightly below six million. The total unemployment rate now stands at 26.3%, while youth unemployment rate is 56.1%.

However, a few points are worth keeping in mind when assessing the importance of these figures:
  • The figures are not seasonally adjusted, so the decrease is clearly linked to the arrival of the summer - when a lot more seasonal jobs are on offer. The two Spanish regions where the number of employed people increased the most were the Balearic Islands (Ibiza, Formentera, Mallorca and Menorca) and Andalusia - top tourist summer destinations.
  • A similar phenomenon took place last summer. The initial, non-seasonally adjusted figures for June 2012 showed a 0.2% drop in unemployment from May 2012. However, once these figures were seasonally adjusted the result was actually a 0.2% increase. The graph below highlights this well, showing that there is a similar dip in unemployment every year when the summer approaches (data are from the EU's statistics office Eurostat, click to enlarge).
  • Part of the decrease in the unemployment rate is also due to a reduction in Spain's active population (those working or actively searching for work) - 76,100 people less over the same period. To fully judge the importance of the figures, it is also worth looking at the level of employment which is not impacted by such a change in activity. The figures for June 2013 showed employment increased by only 149,000, much lower than the overall fall in unemployment.
    • A final point to keep in mind is the on-going emigration of Spaniards. This has reached record levels with close to 60,000 Spaniards emigrating in 2012 and many immigrants also moving elsewhere. This is obviously linked to people dropping out of the active labour force. We may well see future declines in unemployment but they will be meaningless if they simply arise from less people actively searching for work or moving abroad to find work elsewhere.
    Unsurprisingly, the Spanish government had predicted "good" data - and will probably hail the new figures as a success of its policies. But once the summer is over, as happened last year, the figures may ultimately tell a rather different story.  


    Rik said...

    In a country like Spain with heavily protected jobs, normally you will see first that the economic/GDP trend is broken and after that de unemployment trend.
    Most likely Spanish employers have still employees they basically want to fire but are not able to. Or they simply wait to avoid the costs and hope for better times.

    Usually employment start first is the economically strongest regions (unless it is government jobs, but here they donot have the cash for that). Andalusia is as economically dysfunctional as it gets. So imho it is clear it is tourism, which is seasonal.

    Emigration, is a worrying sign. It basically works like aging (accelerated aging even). Demographics change and not for the better. Likely it will concern: younger, better educated, with language skills people with few dependants. The ones that are supposed to pay another 30-40 year for the Spanish welfare state and inefficient government.
    So it is probably not only demographics but also qualitywise that the labormarket is hit.
    And Spain unlike much of the Northern countries donot have older say the 50-60 year olds that are better trained than the youth. A trend we see in eg the States.
    This (older) group is largely considerably undereducated and has little languageskills.
    However the earlier outflow of Spaniards 50-60s have largely returned to the homeland after their original country boomed. Which was rather unusual. No guarantee of course for this situation, hard to see eg how Spain will boom again.

    Rollo said...

    Terrible to see the spiral of decline forced on to this once proud people by the cruel experiments of the EU cream. Or is it the scum that rises to the top?