Despite all odds, the Spanish labor force is showing remarkable resilience during times of economic uncertainty and war. Already, the coronavirus crisis is a nightmare. Neither the Russian invasion of Ukraine or the escalating inflation are affecting employment. At the moment, it is bouncing back more than 5% and not being affected by any external event. Surprisingly, this rebounding rate is well above the growth of economic activity. This is something unusual.
This is a historic turnaround. Spain has been able to regain its affiliation level before the pandemic and even create nearly the same jobs as if covid-19 hadn’t broken out in just two years. In just three months, almost 800,000 jobs had been destroyed. This was unprecedented.
Social Security has been able to recover 800,000 of its lost affiliates over the last two years and add more, even though the hours worked are still lower. In particular, Spain has now reached the historic milestone of 20 million employees. This summer, the bar will be set at 20.5 million.
How is this possible? There are many keys to unlocking this vertiginous climb. First, it has been a different crisis than the others. Fedea associate researcher Florentino Florgueroso points out that “we knew it was going to end soon, and it didn’t have to harm the future of many businesses that could survive.” Mari Cruz Vicente, secretary at Accion Sindical de CCOO, explains that the ERTE was a very different approach to other measures. “They have offered a frankly significant result and have meant that millions of jobs are maintained in thousands of companies.”
It was also important that the recession happened at a time when the economy was recovering well. Because they had hoarded profits, amortized debt and were more prepared for this recession than in previous years, the companies have been able endure.
The Administration is the greatest protagonist of the recovery. It has been responsible for one in three new jobs since February 2020. More than 260,000 people have taken their jobs to an historic level, well above the 2.82million affiliates.
Public Administrations had to be strengthened in many areas due to the pandemic. However, they were able to do so in education and health, two sectors that saw strong growth over the past two years. This doubles the overall pace. Javier Blasco is the director of Adecco Group Institute. He believes that it is “not good news” that the State is the main engine of employment. The economy requires a productive fabric and wealth, something which -he stresses – cannot be achieved with public employment.
Although it was costly, it is true that the private sector has recovered and outperformed the level of employment before the pandemic. This was in the first quarter of this year. The Active Population Survey (EPA), however, contains a very important piece of data: after the crisis, public employment has increased four times faster than private employment. He has done this with temporary jobs. The labor reform has resulted in a drop of 22.1% in the rate for temporary employment. However, paradoxically, 32.5% rises to the top, more than ten times the average rate.
Self-employment is another key driver of this rapid recovery in the labor market. The State created 33% of the almost 770,000 new jobs. Another 10% can be attributed to the self employed, who have grown by more 75,000 in the past two years, despite a slowdown, and now has over 3.33 million affiliates. According to OBS Business School, most people don’t do this by choice. They are forced to reinvent their lives because they lack work.
Spain has over three million unemployed registered to date. Despite the fact that unemployment has not risen as fast in this recession and thanks to the ERTE it has fallen by one million since February 2021 when it was above four million.
It is possible to say that full employment exists in Spain, as well as the majority of available vacancies on the Spanish labor market. This is because the telecommunications industry has experienced a growth rate of more than 18% since the pandemic, making it the most jerky sector. This industry has, however, not stopped being the engine of Spain’s economy and has barely recovered its pre-Covid level. Spain is still dependent on tourism for the majority of its GDP. Blasco warns that Spain must make “impressive reforms”, not “aesthetic reforms”, to overcome “many cliches” to become a more competitive country.
