Employment stops sharply and unemployment rises in the worst July in history

An employment office. / photo: Efe | video:ep

The Government had already predicted it, but for the first time at the beginning of summer, more than 7,300 jobs have been destroyed and there are 3,230 more unemployed

Lucia Palacios

Sudden halt in employment in the middle of summer, a propitious time for the labor market. The Government wanted to prepare us for bad news and has already predicted in recent days a slowdown from the second half of July due to “uncertainties” in the labor market. But it has been a black July, worse than expected and far from the forecasts made just over two weeks ago by the Minister of Social Security, José Luis Escrivá.

Moreover, it is the worst July in all history, at least since records exist. Never before, not even in the midst of a pandemic or during the Great Recession, had jobs been destroyed in the month in which many Spaniards start their vacations, and it is not unusual for unemployment to have risen either, you have to go back to 2008 for that. But this has been the case in 2022 after many months in which the labor market had shown signs of unprecedented resilience in the midst of a complex scenario marked by the war in Ukraine, the price crisis and supply problems.

Because until now the Spanish labor market was characterized by extreme weakness that any external event hit hard, but on this occasion it maintained its robustness and even grew at historical rates and above the progress of the economy, something also unusual.

Only in the last two months had a certain slowdown been noticed, which is now worsening. And that autumn has not yet begun, which is the period in which positions are traditionally lost, so everything indicates that this has only just begun.

Calviño admits that

In July, 7,366 jobs have been destroyed while unemployment has risen by 3,230 people, according to data published this Tuesday by the Ministries of Social Security and Labor. Despite the fact that the rate of job creation has slowed down from 5% to 3.8% in just two months, the system remains above the barrier of 20.3 million affiliates, while the number total number of unemployed stands at 2,883,812.

The Government, however, highlights that, in seasonally adjusted terms, the number of Social Security affiliates increased by 9,104 people in July, thus accumulating 15 consecutive months of increased employment. Moreover, it predicts that in the next two months contributors will continue to add. “After the exceptional performance in June, jobs continue to be created in July, probably pointing to an advance in hiring decisions this summer,” says the press release.

Improving the quality of employment

The good news is that seven months after the entry into force of the labor reform, its positive effects in improving the quality of employment continue to be appreciated. In July, the increase in affiliates with indefinite contracts continued to accelerate, with 1.5 million more affiliates with indefinite contracts than in the years prior to the pandemic. Thus, the proportion of affiliates with indefinite contracts reaches 80%, 11 points more than what was usual before the pandemic.

In previous years, permanent hiring was reduced in the summer, compared to the increase that is being observed this year. In addition, especially positive effects can be seen among young people, a group with a usually high rate of temporary employment. Among those under 30 years of age, the percentage of workers with an indefinite contract has risen by 30 points compared to the average for this month, going from 34% to 64%.

As a result of the growth in employment, the ratio between contributors and pensioners reaches a decade high, standing at 2.39.

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