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Spain shed 622,600 jobs and unemployment reached 16.13% in 2020

The effects of the coronavirus pandemic on the labor market are reflected in a new release of the workforce survey EPA

The food and drinks sector has suffered significantly from coronavirus restrictions.
The food and drinks sector has suffered significantly from coronavirus restrictions.Albert Garcia
Manuel V. Gómez

The coronavirus crisis delivered a serious blow to the Spanish job market in 2020. By the end of the year, 622,600 jobs had been destroyed and there were 527,900 more people out of work for a total of 3.71 million unemployed, according to the EPA workforce survey released on Thursday. The jobless rate also reached 16.1%.

When the pandemic hit, employment was on the verge of fully recovering from the financial crisis of 2008 and the protracted recession that followed. The new crisis has evidenced that Spain has yet to tackle one of its enduring structural problems: the labor market, which has been posting an average unemployment rate of 16.5% since 1980.

The jobs debacle in Spain began where it usually does: in temporary contracts

The EPA survey is the best indicator of the job market’s health, and the latest figures released on Thursday show that over a million jobs were destroyed between March and June, a period when Spain was under a strict home lockdown aimed at curbing the coronavirus pandemic. The second quarter of 2020 set a new statistical low for the Spanish job market.

The jobs debacle in Spain began where it usually does: temporary contracts. In just a matter of weeks, there were a million fewer people registered with Social Security. Temporary contracts accounted for nearly two out of every three eliminated jobs.

The second half of the year was better. Jobs were created in the summer and many contracts were also signed in the last quarter – as a matter of fact, the 167,400 new jobs created during that time is the best figure since 2004. There was also a 10% rise in working hours, suggesting that gross domestic product (GDP) figures due for release on Friday will probably show a positive evolution.

If so, it will dispel fears of a relapse into recession, a possibility that Social Security Minister José Luis Escrivá floated a few weeks ago. Positive GDP figures would also temper the gloomy forecasts about the Spanish economy released in recent months.

However, it bears noting that none of these job market figures – not the annual or quarterly data, not even the forecasts – fully reflect the impact of the ERTE job retention schemes and aid for the self-employed. These measures have cushioned the blow through an investment of around €35 billion in public funds, not counting the guarantees offered by the state-owned bank ICO.

The EPA survey shows that around one of every 10 people in employment worked from home more than half of each working week

The number of furloughed workers also dropped from 3.4 million in the second quarter of the year to slightly over half a million. These workers do not count as unemployed even though their working hours have been reduced or placed on hold.

Remote work has been another lifesaver for the labor market. The EPA survey shows that around one of every 10 people in employment worked from home more than half of each working week.

The question now is how many workers on the ERTE scheme – which has just been renewed for the fourth time and is now set to expire on May 31 – will be able to return to their posts or quickly find a new job once the program ends. This will be the real measure of recovery.

English version by Susana Urra.

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