The EPA indicates that inertia continues in the labor market

The EPA indicates that inertia continues in the labor market

As is usual in the fourth survey of active population of the year, we have lights and shadows in the data of our labor market. On the one hand, we see that the inertia of the labor market continues to work and the reality has been more favorable than what analysts expected. In the last quarter of the year, the drop in unemployment was 0.6% and employment increased by 36 thousand people. Despite the positive annual figures, which we will later analyze, it is evident that the slowdown in job creation is a reality that is becoming stronger as the months go by. As an example, we see that unemployment in 2015 decreased by 678 thousand people, in 2016 by 541 thousand, in 2017 it closed with 471 thousand and 2018 ended with 462 thousand fewer unemployed.

Of the published data, and as a summary of the year 2018, the most prominent are that unemployment has closed the year with 14.5% of the population (compared to 16.5% we had for these same dates last year) , employment has grown by 556 thousand people (the best figure in 12 years) and unemployment fell, as we said earlier, in 462 thousand people, leaving the number of unemployed in 3.3 million people recording its sixth consecutive year of decline . Lastly, and as a main data, the number of employed persons increased to 19.5 million, its highest level since 2008.

By sectors, as usual, the greatest job creation was generated in the services sector with more than half of the hirings (428 thousand). Equally the figures have improved especially in the construction that created 136 thousand, followed by agriculture with 4 thousand and, on the other hand, the cross currency, the industry has given us, losing 3 thousand jobs.

Despite the hopeful data of 2019, according to the macroeconomic data we are receiving and according to the expectations that this data produces in the future, we expect a complicated year in economic terms and, therefore, for employment. We will not go into recession, but there will be a significant slowdown in the economy that will have a great impact on job creation.

We are facing an economic scenario with many uncertainties that, in the medium term, if the right political decisions are not made, will take their toll. In the coming months, we will probably have a mirage thanks to the municipal and regional elections that will take place next May. These elections will create more employment than usual in the public sector; For example, in the EPA that we are analyzing, 43 thousand jobs were created in the public sector, while the private sector fell by almost 7 thousand employees. No doubt this will make up the data between now and Holy Week.

A part of the electoral period, and in the face of exports and fundamentally tourism, we will see the impact on our economy of the extension of the deadlines for the agreement with the United Kingdom on the Brexit, do not forget that during the year 2018 we visited about 20 million Britons.

In addition, everything seems to indicate that this year GDP will grow by 2%, private consumption will be reduced by 2% and public consumption, after the elections, is expected to fall by 1.5%. In this way, the national demand will be reduced to 2%, down 0.8% the figure registered in 2018.

In addition to the above, we must consider the following variables: the recent increases in social costs, which will increase contracting costs by an average of 10%; corporate profits will be cut in 2019; exports (which were the engine of growth in previous years) will be affected by the cooling of the world economy, the result of trade wars; and, to round off the picture, the uncertainty generated by the rise in the Interprofessional Minimum Wage (which, according to the estimates of the Bank of Spain, could mean a loss of 10% of less qualified jobs). There are too many unknowns on the horizon and as an example of the uncertainty described, we see that on December 31, 2018, with the entry of all these measures, 75 thousand contracts were destroyed more than the same day of 2017.

Of course, it is not time to play with unrealistic budgets, such as those presented these days. If nothing remedies it, they will suppose an economic regression, a greater indebtedness and an evident stop in the creation of employment.

* Carlos Martínez, president of IMF Business School,


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