Hardly a respite

After climbing for four months in a row, the fall in registered unemployment last month of 59,094 is the biggest for the month of December in the statistical series compiled by the Labor and Social Security Ministry. The decline in large part was driven by an uptick in the services sector during the Christmas holiday period. The sector saw a fall in the number of people signed up as unemployed of 49,438. However, the deterioration in industry and construction continued, with a rise in unemployment of 2,794 and 4,325 people respectively.

The performance of the labor market during the month is seen more clearly if one examines what happened to employment, and in particular the number of people affiliated to the Social Security system. The number of people making contributions to the system declined by 88,367 from November leaving the average for the year at 16,442,681. It is true that a significant part of the drop in December was due to professional carers classified as such under the Dependency Law ceasing to make contributions as a result of the decision on the part of the government to exclude this sector from the system.

In all, registered unemployment ended the year with an increase of 426,364, or 9.64 percent, to 4,848,723. The increase in unemployment last year was the biggest in the current statistical series and significantly higher than in the previous two years. The number of jobless rose by 322,286 in 2011 and by 176,470 in 2010. The destruction of employment as measured by a fall of 787,000 in the number of people signed up with the Social Security system is clearly higher than the sum of the number of contributors lost in the previous two years.

More than five years after the start of the crisis, it would make sense that the pace of the destruction of jobs should start to slow, particularly after such a sharp reaction in the first years of the downturn seen in the most labor intensive sectors, notably home construction. However, this observation does provide grounds for inflated hopes about the economy's capacity to create jobs. Demand and the confidence of economic agents continue to point to an economy that will remain in recession during 2013. This is the view held by all of the multilateral agencies and Spanish analysts.

On top of the sharp deterioration in the economic indicators witnessed throughout last year, the outlook for the main European economies is not exactly favorable for a continuation of the push provided by external demand. Exports of Spanish goods and services, which have performed well previously, will feel the weakness in demand from Germany, France and the United Kingdom. German Chancellor Angela Merkel is right when she says that overcoming the crisis in the euro zone will take time. This is due to a large extent to the inappropriate policies pursued in the single-currency bloc. Calls for severe fiscal adjustment measures excessively concentrated in time have only served to exacerbate the recession and destroy potential growth.

The outcome of the imperative of austerity at any price is already sufficiently clear. To continue to pursue such a policy in no way will lead to a rapid and intense recovery.

Beyond the damage signaled by the economic indicators, the mortgaging of future social welfare and the destruction of potential economic growth are witnessed in a lack of investment and an erosion in human capital that such extraordinary unemployment highlights.