Unemployment falls due to temporary hiring for summer tourist period

The teeming ranks of the unemployed in Spain diminished slightly in the third quarter coinciding with the emergence of the economy from one of its longest recessions in decades. But most of the jobs created were of a temporary nature, related to increased demand in the tourism sector during the high season.

According to the National Statistics Institute’s Active Population Survey (EPA), released on Thursday, the number of people out of work in the period July-September declined by 72,800 to 5.904 million. Employment increased by 39,500 people to 16.823 million. As a result, the jobless rate declined to 25.98 percent from 26.26 in the second quarter.

The Bank of Spain on Wednesday estimated that GDP had grown by 0.1 percent on a quarterly basis in the third quarter, ending nine consecutive quarters of shrinking output.

The poor quality of the jobs created was evidenced by the fact that the number of people on indefinite contracts fell by 146,300, while the number of people hired on a temporary basis rose by 169,500. In addition, employment only grew in the services sector and declined in the rest of the economy.

Of the 39,500 additional people who found work, 15,200 were self-employed. The number of public sector workers employed declined by 12,600 due to the government’s austerity drive.

The number of indefinite contracts fell by 146,300, while temporary hiring grew by 169,500

The size of the total active population declined in the quarter by 33,300 to 22.728 million, possibly influenced by an increase in the number of young people who have emigrated.

Correcting for seasonal effects and the number of working days, unemployment actually increased 0.21 percent and employment fell 0.42 percent, the 22nd straight quarter in which the number of those in work has declined.

Prime Minister Mariano Rajoy described the figures as positive, but warned there was still a long way to go before the recovery firmly established itself. “This is a positive figure because it is the best EPA for this quarter since 2005. That is good as is the fact that the economy in Spain grew for the very time in a long while.”

The secretary of state for the economy, Fernando Jiménez Latorre, said that thanks to the labor reform the economy should be able to start creating jobs when it is growing at a rate of 1.0 percent, which he expects to be the case in the middle of next year. The government’s forecast for GDP growth for 2014 is 0.7 percent.

The Confederation of Spanish Business Organizations (CEOE), the country’s largest employer group, described the latest EPA as “moderately positive” but Spain’s main labor unions, CCOO and UGT, pointed to the seasonally adjusted figures, which they said continued to show that the labor reform is destroying jobs.

The reform “continues to cause massive destruction of employment, particularly stable employment with rights, which was and remains its hidden objective,” the union said in a statement.