Spain: Employment follows recovery path

Numbers are brighter than the previous years in month-on-month, quarter-on-quarter and year-on-year terms. So we see that registered unemployment diminishes and the social security affiliation increases.

In annual terms, the number of affiliated increased by over 300,000 to 16.685 million, with higher intensity during the 2Q14. Also, the registered unemployment in one year fell by more than 300,000 people.

The most important aspect of these data is that they mark a change in trend, especially during spring. The number of contracts increased by 18% compared with 2013, which is 1.1 million in June (26% of which are indefinite contracts).

The first conclusion is that the Spanish recovery is getting more consistent, what with these employment data the GDP will be positive in the 2Q14 –more than in the 1Q14, and enough to pursue a growth exceeding 1.2% by the end of the year (as long as there are no black swans in the horizon).

A second reading of these series leads to contain our enthusiasm. Seasonal adjusted data leave June growth with a decrease of 16,000 unemployed people (versus 122,000 recorded in the series) and an increase of 8,000 employed people (versus almost 60,000).

Furthermore, the improvements on employment are focused on precarious areas, temporary or partial contracts, low-qualification jobs, subsidized employment. The worrying aspect is the unemployment benefit, which reduces the baseline by exhaustion of benefits. After all, each month there are more excluded people, without benefits or employment.

Most of the people who lose the benefit are still unemployed, and they create an additional problem that requires other kind of policies and actions. Recovery is obvious, but weak and cautious. Undercurrent problems are still alive.