Fedea detects 160,000 ‘hidden’ unemployed: The Employment Service secretly “adjusted” October figures

Spains unemployment problem

There was a trick to the surprising decline in unemployment in October, the largest in a month in which it increases almost every year. According to an analysis by Fedea, the result was influenced by a “non-communicated adjustment” by the SEPE in the records of job seekers with fixed-term contracts that generated a gap of 160,000 people with respect to the ‘official’ figure for the fall in the number of unemployed.

The researcher Florentino Felgueroso draws attention to the “effective unemployment”, which adds to the registered unemployment figure the number of job seekers with an employment relationship (discounting those affected by ERTE). This category includes the permanently unemployed who are in a period of inactivity but are not counted as unemployed.
This effective unemployment increased by 130,691 persons in October. Thus, the gap with the variation of registered unemployment (-27,027 people) exceeds 160,000 people.

Felgueroso, has explained that the opacity of the change made by the SEPE makes it impossible to estimate exactly the “size of the adjustment in the permanently unemployed”. What is worse, it is not known whether it was a one-off change or whether it will continue in the coming months.
What is clear is that this impact raises many questions about the unemployment data. “The word is not (statistical) make-up, but when you are not transparent it is difficult not to think about it”, he stressed.
This can be seen when comparing the evolution of registered unemployment and actual unemployment since the labour reform. Thus, while at the end of the year the monthly variation of the two remained somewhat similar, after the labour reform, this ‘rhythm’ was broken.

Although in the first few months it can be attributed to the period of implementation of the regulation (which was not fully in force until April), it can be seen that the October adjustment would have been particularly beneficial for the government after the bad data of the summer. But the revision, and the opacity with which it was carried out “raises some doubts about the real situation of our labour market that should be clarified as soon as possible”, he points out.

In his analysis, included in the fourth quarterly Labour Market Observatory created by the EY-Sagardoy Talent and Innovation Institute, BBVA Research and Fedea, Felgueroso criticises the lack of transparency of the October data.

The “anomaly” of the “adjustment” in the SEPE statistics was not explained at the time by the Ministry of Labour, which blamed the evolution of unemployment on the beneficial effects of the labour reform and ignored the existence of a revision of the data on permanent and discontinuous workers that could distort the statistics.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.