A review of Spain's good employment figures
The rate of job creation has been surprisingly high since economic activity began to recover in 2013 Q3. The number of registered workers affiliated to Social Security, seasonally adjusted, has been growing since August 2013 and the year-on-year rate of change has risen almost non-stop each month, reaching 3.5% in April. This Focus provides a detailed analysis of the sectors that lie behind this positive trend.
The breakdown of the contribution to growth in employment by sector reveals that, after discounting the contribution made by construction and public administration, April's year-on-year rate of change is 0.7 percentage points below the overall variation, namely 2.8%. In other words, although the recovery in employment is widespread, suggesting that it will continue, the good trend in the first few months of 2015 has broadly been supported by these two sectors (see the first graph).
LFS figures reveal that public sector employment rose above its pre-crisis level in 2014 Q1 and is currently 1.2% higher than this figure (see the second graph). Moreover, the public sector is expected to continue making a positive contribution to job creation this year. By way of example, Royal Decree Law 3/2015 of 22 March substantially expanded the supply of public jobs for 2015, offering 6,692 ordinary positions (1,684 in 2014) and 724 extraordinary positions. Nonetheless it should be noted that medium-term growth in this type of employment is quite limited in a context of fiscal consolidation. Most of the recovery should therefore come from the private sector whose employment level is still 18.1% below its 2008 level. In this respect, of note is the good trend in the tourism sector with an increase in affiliated workers of 4.1% year-on-year in April, coinciding with the arrival of 5.4 million international tourists the same month, 2.8% more than in April 2014.
Construction has also performed well over the last few months. After losing more than 1.5 million workers registered with Social Security between 2008 and 2014, since October it has recorded positive growth rates, reaching 5.6% in April, clearly higher than the other sectors. The adjustment suffered by the construction sector reduced its share of employment from 12.0% in 2008 to 5.7% in 2014 (see the third graph) but this last figure is comparable with that of the euro area as a whole (6.6%), so we expect construction to make a positive contribution to job creation from now on, at a compatible rate with the moderate recovery in the real estate market.
In short, the overall situation for the employment trend in the recovery is very positive. Although it is true that a large part of the improvement in employment is due to the boost provided by public administration and construction, we expect this renewed energy to spread to the other sectors.
