A third of businesses will see layoffs in the first half of 2011

Employment is still in the doldrums. In the second semester of 2010, four out of 10 businesses reduced their staff and just one in four increased it. And this trend is not expected to improve in the first half of 2011. Most participating businesses said their employee numbers would remain stable at least until June, with just 15.5 percent expecting to hire new workers. On the positive side, the percentage of employers expecting to lay people off is slightly lower, yet it still represents one in three firms.

These results and expectations coincide with unemployment figures made public this week by the Labor Ministry, which reflect a 3.2-percent rise in the number of jobless people from December, to reach over 4.23 million individuals, the highest level since 1966 and the highest in the three years that Spain has been in economic crisis.

Unemployment is now at 4.23 million, the highest level since 1966

Despite new labor reforms going into effect, there were fewer firms where over 90 percent of the staff had open-ended contracts compared with the first semester of the year: five out of 10 respondents, compared with six out of 10 in the previous survey. Yet the number of firms where between 80 percent and 90 percent of employees had fixed contracts grew slightly. Meanwhile, the number of companies where more than half of workers are on temporary contracts grew from 3.4 percent to 5.5 percent.

With regard to this year's hiring plans, one out of four respondents said they would reduce the number of fixed contracts while six out of 10 said they plan no changes to their number of temporary contracts. Official employment figures show that out of 1.11 million registered contracts last January, only 9.2 percent were open-ended.

Broken down by sectors, the worst situation was in construction (six out of every 10 companies reduced their workforce) and in finance, insurance and real estate (where 55 percent of businesses made personnel cuts). Conversely, the services sector performed better, with four out of 10 companies hiring new workers.

This figure seems to clash with the latest information on unemployment, which according to the Labor Ministry rose in all sectors, but especially in the services sector, which represented 80 percent of all new jobless people.

Finance, insurance and real estate are also the most pessimistic sectors when it comes to employment expectations for the first six months of 2011: 53 percent of firms in those sectors said they would be laying off workers.

As for the evolution of employment in terms of company size, most of the firms that fired workers in the second half of 2010 had between 101 and 500 employees (62 percent), followed by firms with over 5,000 employees, 50 percent of which fired workers.