CORONAVIRUS

Spain reports over one million job losses during coronavirus crisis

A quarterly fall of this scale was not even recorded during the worst months of the 2008 global recession

An employment office in Madrid on July 2.
An employment office in Madrid on July 2.Eduardo Parra / Europa Press

The coronavirus crisis continues to have a devastating effect on Spain’s labor market. According to the latest workforce survey (EPA) released on Tuesday by the National Statistics Institute (INE), nearly 1.1 million jobs were lost in the second quarter of 2020. This is an unprecedented drop in the statistical series. A quarterly fall of this scale was not even seen during the worst periods of the financial crisis that began in 2008.

However, the impact of the crisis, which led to a prolonged lockdown and two-week total shutdown of all non-essential economic activity, was mitigated by the government’s ERTE furloughing scheme. Under this system, companies suffering losses from the Covid-19 pandemic and the confinement measures could temporarily send home workers or reduce their working hours. In June, the government agreed to extend the scheme until September 30.

A total of 3.37 million people are unemployed in Spain and the unemployment rate is at 15.3%

This furloughing scheme and other measures introduced during the economic hibernation helped to contain the number of job losses. Taking into account these furloughed workers, the INE estimates that 13.9 million Spaniards effectively worked between April and June, out of a total of 18.6 million formally in the workforce.

But while the EPA is the best measurement of activity in the labor market in terms of employment, it provides less clear data on the state of unemployment. According to the survey, unemployment rose by just 55,000 people in the second quarter, a figure that is grossly distorted due to the difficulties of meeting the EPA’s definition of an active job search during the confinement period.

It is likely that many people who lost their job have been classified as inactive – neither employed or actively seeking employment – because they were unable to look for work during the coronavirus lockdown. This would explain the discrepancy between the number of people who lost their jobs – 1,074,000 – and the number of people who became unemployed – 55,000.

According to the EPA, the number of people considered to be out of the workforce in Spain rose from 16.5 million to 17.6 million in the second quarter. As a direct consequence of this, the workforce fell significantly, from 22.9 million to 21.9 million between April and June. This figure, linked both to economic variations and demographic and migratory changes, normally tends to fluctuate less than the other workforce indicators.

The second semester between April and June is traditionally the best period for employment in Spain

Given that the confinement measures have come to an end, many people are expected to now actively look for work, meaning that unemployment figures could rise by tens of thousands in the next quarter. This, however, depends on whether health authorities introduce new restrictions to control the rise in Covid-19 cases seen in the past few weeks.

The second quarter between April and June is traditionally the best period for employment in Spain. It coincides with the start of the tourism and the harvesting seasons, while the good weather promotes building work. Temporary work contracts typically boost staff numbers. But not this year.

The entire second quarter reflected the impact of the coronavirus crisis, unlike the first quarter, which included the first two weeks of March before the declaration of the state of alarm. According to the EPA, a total of 3.37 million people are unemployed in Spain, the unemployment rate is 15.3%, and the workforce has fallen to 18.6 million.

English version by Melissa Kitson.

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