The number of people looking for work in Spain fell below 3 million for the first time since the global financial crisis 14 years ago, as the unemployment rate fell to 12.5% in the second quarter.
An even more welcome surprise was that the number of permanent jobs rose by 617,000 year-on-year, while temporary jobs fell by 241,000.
“When you create more permanent jobs, you incentivize companies and workers to increase their productivity,” said Ignacio de la Torre, chief economist at Arcano. “People on temporary contracts have no incentive to work more efficiently or bosses to train them.”
The increase in permanent jobs follows labor reforms, approved in February, which were specifically aimed at reducing the high proportion of the Spanish workforce on temporary contracts.
The percentage of people in short-term jobs has fallen from around 25% at the start of 2022 – the highest in the eurozone – to around 22%. The number of people in permanent jobs is estimated to have increased by nearly one million over the past 12 months.
Spain’s National Statistics Institute said on Thursday the number of unemployed fell to 2.9 million in the second quarter, from 3.2 million in the first quarter – the first time since 2008 that the euro zone’s fourth-largest economy recorded a drop. unemployment rate below 3 million.
The jobs figures support projections of upbeat second-quarter gross domestic product numbers due out tomorrow. The Madrid government this week confirmed its previous annual growth forecast of 4.2% for this year and only slightly lowered its projection for 2023 to 2.7%.
“Slightly behind schedule, the Spanish economy is gaining ground thanks to the recovery of the services sector,” said José Ramón Iturriaga, fund manager at Abante Asesores. “These employment figures allow us to be optimistic about Spain’s relative economic performance going forward.”
The number of people in employment increased by nearly 800,000, or 4%, over the past year to reach 20.5 million in the second quarter. Services jobs accounted for the vast majority of the employment rise, with the sector employing 693,000 more people than a year ago, compared to 111,500 more in manufacturing.
“It is natural that the strong recovery in employment has been concentrated in low-productivity sectors like tourism,” de la Torre said. “But this pace cannot be maintained over the medium term, as job creation slows. It is important for growth that more people are employed in higher productivity sectors.