Article published by José Alberto León Alonso in Diario de Avisos on 05/11/14.
During the last two weeks, the data corresponding to the first quarter of 2014 from the Active Population Survey (EPA) have been published, as well as those on affiliation and registered unemployment for the month of April 2014. The published results are apparently contradictory with regard to employment, because while the EPA indicates a decrease during the first quarter of the year of 79,600 people compared to the same quarter of the previous year (-0.47%), the number of Social Security affiliates shows a creation of employment of 197,701 affiliates compared to April 2013, which is the best data for this month since 2005. Although the periods are different, it is a fact that since the end of 2013 the affiliation data have been better than the two waves of the EPA published, so it is not surprising that for the citizen the situation is confusing. What are we left with? Is employment recovered or not? To answer this question, several aspects must be taken into account.
U!
First. The methodology for accounting for one figure and another is different, not only because the EPA is a survey and affiliation is a record, but because in the affiliation data, unlike the EPA, multi-employed workers are counted more than once. And in recent months the growth of part-time contracts and multiple jobs has not stopped: workers with two or more jobs have doubled in the last year. So this fact explains at least part of the difference in the figures. Part of the increase in membership actually does not mean that more people are employed, but rather that some of them are registered two or more times.
Second. Holy Week, during which the usual hiring of workers in the tourism sector usually occurs, was enjoyed in 2014 during the month of April and in 2013 in March. And the EPA for the first quarter compared the first quarter of 2014 without Easter with the same period of 2013 with Easter, so it is likely that, for the same seasonal reason, the EPA for the second quarter will show positive occupancy figures.
Third. In March the Government introduced the “flat rate” for new members of Social Security, with a payment of €100 per month for permanent contracts and €50 per month if you are self-employed, much lower than usual. This reduction in the cost of legal work (that which contributes) is generating a process (difficult to quantify) of abandonment of the underground economy by people who worked but did not contribute to Social Security. This process seems to be especially significant among self-employed workers and family members of business owners. In fact, the rate of increase in membership is twice as high among the self-employed as it is among employees. For the EPA, these people were working equally before and now, since the survey does not ask if your work is legal or not, but rather if you are working, but it does involve new affiliations to Social Security. Thus, part of the growth in affiliations does not come from new jobs, but rather the exit from the underground economy of some workers favored by the reduction in the cost of contributions.
In summary, the year-on-year growth in social security affiliation of 1.22% in the month of April appears to be “inflated” by seasonal factors, by multiple employees and by the exit of some segments of the population from the underground economy due to the reduction in the cost of contributions. The EPA is the official survey on employment and unemployment, internationally accepted and carried out with the same standards as the rest of the EU countries, despite politicians trying to discredit it when the data is not favorable to them. It is a survey carried out permanently among 65,000 homes and 180,000 people, with a reliable data control and purification system that, like any survey, has a margin of error, but with regard to the number of employed people, this is barely 0.3%. Like it or not, the data on the labor market belonging to the EPA is more serious, reliable and rigorous than any other we have and what they say is that during the first quarter of 2014, once the seasonality of Easter was corrected, the number of employed people was reduced by 80,000 people (0.47% less) than in the same quarter of the previous year, and by 17,000 people (-0.10%) compared to the fourth quarter of 2013. In conclusion, in the first quarter of 2014 no jobs were created, no matter how you look at it. Taking into account that in the fourth quarter of 2013 this same seasonally adjusted index showed a growth in employment compared to the previous quarter of around 14,000 people (0.08%), what can be said is that, in practice, employment has been stabilized for six months, it is neither created nor destroyed. Thus, we have gone from a phase of job destruction that has lasted five and a half years (22 quarters), to half a year of stagnation. No more, no less. As we have already seen, the fact that Social Security affiliates have grown during the month of April does not guarantee by any means that we will begin to create net employment, as it could again be due to the fact that this figure was “inflated” by seasonal factors, multiple employees and the exit from the underground economy. So be careful in your analysis. Our forecast is that the Spanish economy will begin a lasting phase of job creation in the second quarter of 2014, but we will know with the next EPA. With current data, it cannot yet be concluded that this phase has already begun.
Even if we enter that phase, there remains doubt about its intensity. With almost six million unemployed, we foresee the creation of one million jobs in the period 2014-2016, which represents just over 300,000 jobs per year, but at this rate the tragedy of high unemployment rates will not be quickly resolved. Emigration will continue, which will reduce unemployment somewhat, but will accelerate the problem of population aging and the need for further adjustments in pensions. For employment to recover quickly, it is essential that construction gets out of the hole. Not to return to representing the insane 18% of our GDP in the years of the bubble, but to go from the current 8% to the sustainable 11% of the period 1995-1998, just before the start of the bubble. Construction could contribute an additional 3% to GDP, which would translate into 600,000 new jobs and as many in activities related to it. Its reactivation is vital due to its intensity in the use of labor and because a relevant part of long-term unemployment has experience in the sector, but lacks training to access other jobs. Unfortunately, the sector still shows no signs of improvement, but the price adjustment is close to ending, and real estate credit to families grew by 25% year-on-year during the first two months of 2014, a trend that, if maintained, would give reasons for hope. We will have to follow its evolution carefully.
