Unemployment rises again

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For the first time since 1994, unemployment rose in Spain in 2001, particularly from August onward. Whereas the government claims that the change is due to the international situation, the trade unions are calling for more substantial employment policies.

From 1994, unemployment in Spain started to fall in both absolute and relative terms. The table below gives figures for 1996, 2000 and 2001, based on both the more inclusive statistics from the Survey of the Active Population (Encuesta de Población Activa) and the more restrictive figures for unemployment registered with the National Institute of Employment (Instituto Nacional de Empleo, INEM).

Unemployment in Spain, 1996-2001
. 1996 2000 2001
According to Survey of the Active Population figures
No. of unemployed 3,540,000 2,370,400 2,179,047 (third quarter)
Unemployment rate (%) 22.2 14.1 13.0 (third quarter)
Unemployment registered with INEM
No. of unemployed 2,275,400 1,557,500 1,575,962
Unemployment rate (%) 14.3 9.2 9.4

Source: Survey of the Active Population and INEM figures.

The strong downward tendency was first broken in 2000, and then more dramatically in 2001. In 2000, the decrease in unemployment was lower than in previous years. In 2001, the tendency was reversed, and unemployment began to rise. The increase was constant from August 2001, with monthly variations around a maximum rise of 51,452 (unemployment registered with INEM) in November. In 2000, unemployment rose for three months in a row (in addition to January when unemployment traditionally rises), whereas in 2001 it rose for five months in a row. The situation is therefore a cause for concern.

In regional terms, the renewed unemployment growth has been most evident in Andalusia, the Canary Islands, Asturias, Extremadura and Galicia. The best situation is found in the Balearic Islands, Catalonia, the Valencian Community and La Rioja. The remaining regions fall somewhere between.

The Survey of the Active Population figures should be used in order to compare the Spanish situation with that in other EU countries. In October 2001, whereas the average unemployment rate in the EU was 7.7% and several countries had levels around 4%, in Spain it was 13%. In other words, at the beginning of the 21st century, as in the 1990s, unemployment in Spain is varying in line with that of the other EU countries, but is 70% above the average. It is the EU Member State with the highest unemployment rate.

Reasons for the rise

Some analysts, often those responsible for economic policy, claim that there is one main reason for the increase in unemployment: the terrorist attacks on the USA of 11 September 2001 and the resulting climate of uncertainty and inhibition of investment and consumption. This has undoubtedly affected some service sectors such as transport and tourism, but the reasons for rising unemployment go back further. Net job creation in 2000 was 5%, slightly lower than the figure for 1999, but far higher than the figure of 2% reached in 2001. It seems obvious that there has been less investment in job creation, and a lack of policies aimed at achieving it. Economic growth was 3.4% in the first half of 2001, 3% in the second quarter and 2.5% in the third. A figure below 2% is expected for the fourth quarter. It therefore seems obvious that the problems did not start on 11 September.

Unemployment not the only problem

Unemployment has fallen in recent years in almost all EU countries, including Spain, but this process has now stopped. Temporary employment is still the main problem in the Spanish labour market (ES0109201F). Though in some years, 9%-10% of new contracts signed have been permanent, temporary employment still affects 32% of wage-earners (20 points above the EU average). This means that hundreds of thousands of workers rotate around the same job with different contracts, and that the pay and health and safety conditions of these people are still often very poor. This is why in recent years the trade unions have placed more emphasis on this problem than on unemployment. They have repeatedly stated that limits must be placed on the excessive advantages of temporary recruitment for companies, that successive contracts must be eliminated and that subcontracting must be monitored.

In other words, as stated at the informal meeting of EU Employment and Social Policy ministers held under the Spanish Presidency on 19-20 January 2002 in Burgos, one must create not only employment, but 'quality' employment.

Position of the social partners

Both the trade unions and the Spanish Confederation of Employers' Organisations (Confederación Española de Organizaciones Empresariales, CEOE) have warned that this increase in unemployment is bad news for society and for the economy, because it will lead to a shrinking of domestic demand.

The trade unions have been calling for effective measures for some time. The Trade Union Confederation of Workers' Commissions (Comisiones Obreras, CC.OO) complains that the government has failed to respond to this new situation in the state budgets for both 2001 and 2002 (ES0109208N), and that it is still obsessed with obtaining a zero public deficit despite the worsening of the economic situation for many families. The General Workers' Confederation (Unión general de Trabajadores, UGT) adds that the new intersectoral agreement on collective bargaining in 2002 establishes a framework that could be used by the government to adopt measures aimed at reactivating the economy. (ES0201207F). For both trade unions, 'the slowdown of the world economy should not be used as an excuse for those who are responsible for managing economic policy, particularly because during the years of high growth (1994-2000) they held a triumphal view of their economic policy.'

The government, however, which in January 2002 admitted for the first time that the situation was a cause for concern, has stated that the fall in employment and the increase in unemployment is the result of the international situation and is therefore out of its hands. It also stressed that the gap between job creation and unemployment is partly due to the enormous growth in the active population, particularly because many women and young persons have joined the labour market.

For CEOE, the situation is a cause for concern. In order to remedy the problems it suggests a reduction in social security contributions, a long-standing demand of the employers.

Commentary

One cannot consider unemployment without considering the labour market in general. Unemployment still high in Spain, though it has fallen in recent years, and in other aspects employment shows very negative characteristics. Therefore, it is particularly striking that there is a lack of sound employment policies and that, at the informal meeting of EU Employment and Social Policy on 19 January in Burgos, the Spanish minister stated that other countries of the EU do not fulfil their duties, whereas Spain does. There are obviously positive aspects in Spain, such as the April 1997 labour market reform agreements (ES9706211F), the March 2001 reform which introduced some compensation for temporary workers (ES0103237F) and the new intersectoral agreement on collective bargaining in 2002. However, these measures are insufficient because the legal framework facilitates unstable employment and the Labour Inspectorate is highly inefficient.

It is particularly unfair to criticise countries such as France and Germany that are among the few that have tried, or are trying, to introduce imaginative employment policies that make employment compatible with high social standards. Perhaps more attention should be paid to proposals such as the recent European Commission initiative to seek an agreement among the EU-level social partners on finding alternatives to mass redundancy in cases of corporate restructuring (EU0201235F). (Fausto Miguélez, QUIT)

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