Grim outlook for employment

Given the labor market’s susceptibility to seasonal and variable factors beyond the control of any state, perhaps it’s about time the Spanish government stopped patting itself on the back when things look up in the job market. In the first quarter of 2016, unemployment as measured by the Survey of the Active Population (EPA) rose by 11,900, bringing to an end a run that has seen joblessness fall. During the first three months of this year, 64,600 jobs were lost, and the number of people available for work, an adjustment factor that explains the difference between the fall in unemployment and the reduced number of jobs, fell by 52,700 people.

The short-term outlook is a slowdown of growth that will probably lead to fewer jobs being created

The Economy Ministry says that despite the poor start to the year, inter-annual comparisons are favorable, which is largely true. But the number of people available for work gives no indication of what will happen in the future. To start with, the acting government’s labor policies have done nothing to substantially reduce unemployment, despite the fall in productivity and growth levels above 3%. The short-term outlook is a slowdown of growth that will probably lead to fewer jobs being created; the prognosis isn’t good, although the jobs created until now have generally been of reasonable quality. We should also take into account upcoming budget cuts of at least €6 billion, along with the continued rise in the price of crude oil.

The acting government’s labor policy has largely been characterized by its failure to create new jobs. We can only hope that the next administration, in July or August, will accord labor market policy the same importance as it has tax and monetary policy, assuming it has the money to do so.

English version by Nick Lyne.