The correction continues
The Spanish economy will continue losing jobs until 2012 despite a rise in employment in April
Unemployment figures for April provide hardly any signs for optimism in terms of the evolution of the labor market for 2011. The fall in the ranks of the unemployed for the month of 64,309 people ? leaving the total volume of out of work at 4,269,360 ? offers seasonal respite from terrible forecasts, and will most likely signal a slight improvement for the coming months. But it is impossible to recover net employment and reduce the number of jobless with low growth rates. The die is cast: modest recovery levels will be insufficient to create jobs, and it is likely that the correction will not be complete until after the first quarter of 2012.
That is not to say that the unemployment figures from April are simply an illusion ? but rather that the only area of the economy capable of creating net employment in such times is the services sector. But the 70,000 jobs that it may create during the quarter are not enough to compensate for job losses in industry and construction. Any improvement possible in the job market will be irrelevant in terms of bringing down unemployment. This forecast is in keeping with that of the Economy Ministry, whose secretary of state has stated what was already evident: that growth in 2011 will be insufficient to generate net employment. Along with the governor of the Bank of Spain, the ministry official has also predicted several more months of credit restrictions.
The current figures only serve to back up the predictions made at the beginning of the recession, which sketched out a long period of very high unemployment for the Spanish economy (with the public costs that this carries with it). Now it seems clearer that if there is a light at the end of the tunnel, it will be after the first quarter of next year. The current situation for Spain's job market is dark. The recession is badly eroding stable jobs; in the last four quarters, the job market has lost around 158,000 fixed jobs (the most protected at the start of the crisis), and it is in this sector that the pending correction to the labor market will have greatest effect.
It must be frustrating for the government to realize that their labor reforms haven't so far managed to increase stable employment. In April, this fell 13.4 percent, with the fall since the start of this year 6.5 percent. What was done badly in the labor reform that could be fixed now? That should be a priority for the government's economic team.
