With this increase of almost half a percentage point compared to the fourth quarter of 2023, the total number of unemployed also rose. Between January and March 2024, Spain reached the 2,977,000 unemployed and is approaching, once again, the 3 million barrier.
In the chapter on Using your Annual Report 2023the organization led by Pablo Hernández de Cos places the structural unemployment rate of Spain around 12% and 13%. This is the limit to which unemployment can be reduced, which will only be lowered in certain situations and in a moderate way, as happened during the last three quarters.
(Spain loses 140,000 employed people and is left with 21,250,000 in the first quarter, according to the EPA)
Months of economic growth that led to a greater market dynamism labor. Something that, although it was also maintained in the first three months of 2024, is no longer seen in the medium term. All study centers and organizations agree: this year and next will see growth, although already moderate, and the economy will also lose momentum beyond those two years.
In itself, an unemployment rate of 12% may not mean anything, but it is revealed to be high when compared to the eurozone average, where structural unemployment is around 6%. The reasons behind such divergence are multiple and respond both to the particularities of Spain's economic activity and to the policies that are applied. Regarding the latter, the Bank of Spain pointed out the impact of the active and passive employment policies, that is, the public employment services and benefits and subsidies.
Employment office, in a file image. Europa Press
Spain's spending on these active policies is comparatively low, as in the case of protection measures for the unemployed. In fact, the regulator points out that They only protect 55% of workers in a situation of unemployment. Furthermore, the replacement rate of the contributory benefit (its amount with respect to previous income) is high, which discourages job search short term.
The Bank of Spain proposes several measures to alleviate this situation, ranging from a comprehensive improvement of labor intermediation of public employment services – with the use of new technologies to match vacancies and employees -, to make subsidies and benefits compatible with employment as a salary supplement.
Temporality vs. stability
In an EPA short of good data, the Ministry of Labor and Social Economy has boasted about the temporary employment rate. At 15.7%, this indicator stood at its historical minimum in the first quarter of 2024. In absolute figures, this translates into 2,837,100 employees with a temporary contract, out of a total of 18,063,900 employees.
“Finally we are a country that combats precariousness even in an adverse quarter for the labor market,” acknowledged the Secretary of State for Labor, Joaquín Pérez Rey, on his social networks.
The Secretary of State for Labor, Joaquín Rey and the Second Vice President and Minister of Labor and Social Economy, Yolanda Díaz, in an archive image. Europa Press
The reduction in the temporary employment rate has been driven by male employment behavior. In their case, it has reduced almost one point, to 13.41%, while among women it has barely moved and remained at 18.17% in the first quarter of 2024.
He number two Yolanda Díaz also highlighted that the temporary employment rate in the private sector fell to 12.3% in the first quarter of the year, which the country is located “in the European environment”.
The Bank of Spain values that decrease in the temporary employment rate and estimates that the vast majority of what were previously temporary contracts are now full-time indefinite contracts. Likewise, highlights the decrease in labor turnoverwhich has gone from 1.33% on the average of the 2015-2019 period to 1.12% in the 2022-2023 period, as a result of the greater number of permanent workers.
However, among these workers there is an increase in the turnover rate in permanent contracts. Specifically, it has increased from 0.25% to 0.61%. Something similar happens in the case of survival rate of employment in the first year.
(The Bank of Spain warns Díaz: the cost of dismissal must be clear to promote economic transformation)
Of all the labor relationships created in March 2022, 16.1% were still alive a year later. In the 2017-2018 period, this percentage was reduced to 11%. However, in the case of permanent contracts (without permanent-discontinuous contracts) the survival rate has gone from 52.5% to 48% in the first year.
“There's a significant room to increase employment stability“said the general director of Economy and Statistics of the Bank of Spain, Ángel Gavilán, who considers that labor instability “is still high.” Specifically, he explained that the worse turnover and mortality data for permanent contracts can be explained by a greater use of trial periods.
The general director of Economy and Statistics of the Bank of Spain, Ángel Gavilán, in an archive image. Europa Press
According to Gavilán, companies previously used temporary contracts to test a new worker and, if they were not satisfied, they simply let the contract run out. Now they need to make use of trial periods, and that means terminating a contract. The Labor and Social Security Inspection (ITSS) has started a campaign to Prevent abuse during employee probation. The organism of The Ministry of Labor will verify contracts that expire after that time, as well as dismissals for not exceeding said period.
Finally, another variable that motivates the Bank of Spain to talk about instability are the outflows from employment to unemployment, that is, the percentage of workers who lose their jobs. Although it has decreased in recent years – going from 3.3% in 2019 to 2.8% in 2023 – it is still higher than those of the euro zone countries (1.2%).
Long-term unemployed
Spain has a problem with long-term unemployed and the EPA data for the first quarter confirmed it again. In Spain, 741,300 people had been unemployed for more than two years in the first quarter of 2024, 2.06% more than in the fourth quarter of 2023.
Those most affected by this situation are people between 55 and 59 years oldwith 140,100 unemployed for two years, 11.45% more than in the previous three months.
(Labor will supervise regional employment policies for unemployed people over 52 years of age)
The Ministry of Labor and Social Economy has proposed reducing unemployment among those over 52 years of age, those most affected by long-term unemployment. If for two years it focused on young people, now will direct its active employment policies to those over 52 years of age.
Outside that age group, the number of very long-term unemployed also increased in the 40 to 44 age group, 11.87% more than in the fourth quarter of 2023. Young people do not escape this situation either. and 51,200 have been unemployed for more than two years in the first quarter, 4.48 more than in the previous quarter.
Youth unemployment
Despite the general increase in unemployment, the first EPA of the year also shed some light. Specifically, for the youngest: The unemployment rate among people aged 20 to 24 fell by 0.74 percentage points compared to the last section of 2023, standing at 24.98%. Despite everything, it is a very high rate and is 12.69 percentage points above the general rate.
By sex, the youth unemployment rate fell for both men and women. In the case of young women between 20 and 24 years old, it went from 24.25% at the end of 2023 to 23.76% in the first three months of this year. In absolute figures, in the first quarter of the year, 151,000 women of that age were unemployed.
A person entering an employment office, in a file image. Europa Press
In the case of men in this age group, The unemployment rate started the year at 26.01%, with a slight decrease from 26.97% in the previous quarter. Thus, 197,000 young people between 20 and 24 years old were unemployed in the first quarter of the year.
In total, Spain counted between January and March of this year a total of 348,700 people between 20 and 24 years old unemployed. This represents 14,200 fewer unemployed than in the previous quarter.
However, if the data for the first quarter of this year is compared with the same period in 2022, when Yolanda Díaz's labor reform came into force, The number of unemployed of these ages has grown by 4.40%. Then, there were 334,000 people between 20 and 24 years old unemployed; two years later, there are 348,700.
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