Spain records historic fall in unemployment following end of state of alarm

The Spanish job market is steadily recovering from the economic fallout of the coronavirus crisis, according to data presented on Wednesday by the Labor and Social Security ministries. These figures showed that the number of people registered as unemployed in Spain fell to 3,781,250 in May – a drop of 129,378 since April. This is the largest monthly fall ever recorded in the statistical series, which dates back to 1996. The last time a similar drop was seen was in 2017.

The historic fall in jobless numbers coincided with the end of the state of alarm on May 9, which saw coronavirus restrictions, such as nighttime curfews and a ban on inter-regional travel, lifted. This in turn boosted activity in sectors such as tourism and the hospitality industry.

Spain is a long way from where it was in February, when unemployment numbers broke the four-million mark. This figure began to decline in April, and the fall was consolidated in May, as the Covid-19 vaccination campaign gathered speed and restrictions were eased.

“This historical and magnificent data point is not due to the success of the government or the [Labor] Ministry, but rather of the Spanish people, who together have been able to face down the biggest crisis in history while maintaining the productive process,” said Joaquín Pérez Rey, the secretary of state for employment and social economy, while presenting the figures.

The Spanish economy has entered a new phase, the recovery is underway

Nadia Calviño, economy minister

The number of Social Security contributors, considered a sign of job creation, also continues to rise. In May, the average number of contributors was 19,267,221 – up 211,932 on the average in April, for a monthly rise of 1.11%. “The Spanish economy has entered a new phase, the recovery is underway, and that is what all economic indicators are telling us,” said Economy Minister Nadia Calviño on Wednesday at the opening of the 2021 Aslan Congress on digital transformation in Madrid.

But the number of people registered as jobless does not include those on the government’s ERTE job retention scheme, which allows employers to temporarily send staff home or reduce their working hours. According to Social Security figures released on Wednesday, there were 542,142 workers on the ERTE program in May – down from 638,283 in April. This is the lowest figure since May 2020, when 3.6 million people were on the furlough scheme – the highest figure of the statistical series. Since then, 85% of furloughed workers have been reincorporated into the workforce.

As the number of workers on an ERTE falls, so too has government spending on the job retention scheme. In May, €632 million went to the program, the lowest figure since the beginning of the pandemic. The total cost of the scheme since April 2020 stands at €17.74 billion.

The ERTE job retention scheme has been extended until September 30, but experts say it is likely the program will be extended again, although it is not yet known how or to what degree this will happen. “As long as it remains necessary and we are hit by the crisis, this support is going to be available. Businesses and workers need security,” said Labor Minister Yolanda Díaz during a radio interview with the Catalan station RAC1.

The recovery of the job market in May was seen across all sectors: agriculture recorded the biggest fall in unemployment, with a drop of 4.78%, followed by the services sector (-3.39%), industry (-3.05%) and construction (-2.71%). But the biggest improvement was recorded in the under-25 age group. In this demographic, the number of people unemployed fell by 32,990 in May, a drop of 9.27% and triple the overall fall. Meanwhile, the Spanish regions that saw the largest decline in jobless numbers were Andalusia (-28,561), Catalonia (-15,368) and Valencia (-12,385).

The May figures on unemployment and Social Security contributors are very positive, and they are in accord with what traditionally happens in the month of May without a pandemic

Lorenzo Amor, president of the National Federation of Self-Employed Workers

“There are indicators that are telling us that we are on a good path, but that we are not going fast enough,” said Florentino Felgueroso, an expert in economics at Oviedo University. According to Felgueroso, the number of Social Security contributors is yet to reach pre-pandemic levels. “This May there were two million contributors, but in the same month in 2019, there were 2.6 million, 600,000 more, which is nearly a fourth,” he said. “This warns us that the [economic] engine is still at half throttle.”

And it’s a similar story for new contracts, said Felgueroso, who pointed out that more than 1.5 million were signed last month, compared to 2.1 million in May 2019. “This is where an improvement in the trend is expected in the coming months, especially in June, which is when decisions will begin to be made about the summer season,” he explained.

A total of 1,545,308 new contracts were signed in May, up 694,691 from the same month in 2020. This represents a rise of 81.67%. But over-reliance on temporary contracts continues to be a problem – 84.9% of all contracts signed in May were temporary, while only 10.1% were permanent hires.

With respect to self-employed workers, who have been among those hardest hit by the pandemic, the latest data also shows gains since April. The number of self-employed rose to 3,307,938 in May, up 15,006 from the previous month. “The May figures on unemployment and Social Security contributors are very positive, and they are in accord with what traditionally happens in the month of May without a pandemic,” said Lorenzo Amor, the president of the National Federation of Self-Employed Workers (ATA).

But Eduardo Abad, the president of the Self-Employed Workers Union (UPTA), was less optimistic: “You have to take into account that the figures for self-employment have been very negative, so it is to be expected that this situation would slowly improve.”

English version by Melissa Kitson.