Jobless claims fall again but long-term worries persist

The labor market is showing signs of stabilizing and even eating into the pool of unemployment comprising some 20 percent of the working population, albeit at a much slower pace than desired.

There were 67,858 fewer jobless claims in June, representing the third consecutive monthly decline, according to data released by the Labor Ministry on Monday. However, the figure is worse than a year ago, when a record month of June saw claims drop by 83,834. Also cause for concern among the ministry is the fall in June of Social Security affiliations after three months of increases.

The numbers cast doubt over the executive's forecasts about a recovery of the labor market in the second half of the year. Although the June decline is even higher than figures recorded in the boom years, the rate this time last year suggested jobless claims should have fallen similarly this year. Taking June data into account, there are 4.1 million jobless people in Spain, although a more reliable figure would be close to five million.

June is traditionally a good month for the services sector due to the beginning of the tourist season. If seasonal effects are eliminated, then jobless claims would have increased by 31,026 people.

An analysis from the hiring side shows worrisome figures, with the gap between workers on permanent and temporary contracts continuing to grow. Open-ended contracts dropped eight percent in June from May, for a 12-month decline off four percent, while temporary contracts rose 2.7 percent in June and 1.6 percent over the year. It is a poor result almost a year after labor reforms went into effect to encourage long-term jobs in a country with a disproportionately high rate of temps.