July 8, 2020

Unemployment continues its rise

After the bad data of the last Survey of Active Population (EPA), the unemployment figures registered in the State Public Employment Service have been consistent with expectations and the figures for the same month last year have worsened.

On the one hand, the October 2018 data have substantially worsened in unemployment, with almost 98 thousand more unemployed (almost double the previous year) and has declined, which is more important: that of Social Security affiliates, which adds more than 106 thousand new affiliations (25 thousand less than in 2018), exceeding 19.4 million contributors.

The number of unemployed has remained at 3,177,659 unemployed. From the data received we must highlight some very relevant aspects: as positive data, we remain, on the one hand, with which a good data of indefinite hiring has been achieved with 10.7% of the contracts and, on the other, it has been given a considerable increase in people who are willing to find a job, hence the increase in membership and the number of unemployed at the same time; On the negative side, we find that employment data have deteriorated in all sectors (as an exception, and as usual, the education sector is the one that has created employment in a massive way) and has substantially worsened youth unemployment of children under 25, falling more than 7%.

All the data we receive should make us think about the immediate future and the drift that our labor market can take. There is no doubt that there are more and more voices that speak of slowing down, stoppage, even recession in our economy and therefore of employment. Are there really reasons to worry? From my point of view yes, and some reasons are significant:

GDP: according to the latest data received, we are facing the worst data since 2014, although we have a “doped” GDP with exorbitant and unsustainable public spending (this year it has increased 2.5% compared to 1.9% of the year past); With a level of indebtedness like that of Spain and the deficit commitments we have with our European partners, it cannot be maintained for a long time.

International Turbulence: With such a globalized world, we are obviously not immune to what happens in our environment. The trade wars between China and the United States, as well as the situation in Europe is worrying as the activity is barely advancing as shown by all indicators of business confidence and confidence in the economy. Finally, we must not forget the problems of Latin America, the recent crises in Ecuador, Mexico or Chile, which only make business results worse, especially for large companies that account for more than 40% of corporate tax collection.

Turbulence in Spain: we are witnessing the worsening of many important indicators or in the best case they are maintained (such as the final consumption expenditure that is artificially sustained by the increase in the Minimum Interprofessional Salary, on the one hand, and on the other by low inflation that is occurring). Thus we find that business benefits have worsened, labor costs have increased (with the loss of competitiveness that they entail), investment has fallen (which plummets almost a third compared to 2018), exports have decreased substantially. And the same goes for electricity consumption and the consumer confidence index, etc. If all of the above were not enough, political instability, which was reflected in the debate we had yesterday with several lies and lack of serious proposals on how to face the future in labor matters and the crisis in Catalonia, puts the icing on a situation that or appropriate fiscal and budgetary measures are taken (with little hope for what we hear in the debate, and how little we hear from the acting President, – which continued with the speech that the labor reform had to be repealed), or What in principle could be a simple bump becomes a deep sinkhole.

* Carlos Martínez, President of IMF Business School,

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