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Momentary improvement

The fall in unemployment in May must be confirmed next quarter to establish a trend

The government has welcomed May’s unemployment figures with optimism. Time will tell whether this is excessive. Aware that the monthly figure would be favorable, it has eagerly exploited the good news for several days, announcing, even before their official release, that the figures would be “encouraging.” In passing, some members of the government suggested that the economic measures taken might at last be bearing fruit, and that this might be the beginning of a recovery. But statistics are one thing; quite another is the way they are exploited. And in this case, the performance of the unemployment rate is a welcome break in a gloomy trend.

During the month of May, registered unemployment fell by more than 98,000, while registration with the Social Security system rose by more than 134,000 contributors. This good news must, however, be qualified. If seasonal factors are taken into account, the conclusion is that the number of jobless people has changed relatively little. And that it is still early to speak of a change of trend in the labor market. What is naturally to be expected, moreover, is continued destruction of employment, though at increasingly moderate rates, during upcoming quarters. This is because in previous statistical timeframes, once the development of unemployment figures was seasonally adjusted, joblessness was seen to go on rising systematically. In May of this year, this has not been the case. A certain deceleration seems to be apparent in the rate of increase of joblessness, and this circumstance is what the government views as encouraging.

After duly welcoming the data, what we then have to do is observe whether the trend continues. The frustration bred by a prolonged situation of unemployment produces erratic movements in the statistics. If the tendency continues through the next few months, the relative depth of the deceleration should be estimated, before leaping to accept analyses that may lead to further disappointment.

Quarterly growth, still marked by a significant contraction of GDP (though less than that of the previous quarter) indicates that May’s rate of registered unemployment may be a mirage, and that the drop will be followed by an almost symmetrical rise in September, when tourism-related temporary contracts run out.

Meanwhile, where there is absolutely no cause for satisfaction is in the growth of temporary employment and the decline in permanent-contract hiring, which fell by 24 percent with respect to the same month last year. But this performance, too, has to be charted over the next few months. It is still too early to discern whether the excessive prominence of temporary employment is attributable to the fact of the economy not having recovered — so that companies can only generate precarious jobs, owing to the downward drag of the recession — or whether, in the future, temporary employment will be a dominant line marked out by the Popular Party government’s labor reform.

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