Spain’s Fake November “Employment Boom”

The Spanish government and its supporters question the GDP figures, which show a very poor recovery, lagging behind the OECD and European Union, stating that employment is recovering stronger therefore the GDP figure must be wrong.

Spain's Fake November "Employment Boom"

Employment is bouncing at a 4% pace after a massive slump in 2020, consistent witha poor 4.5% GDP recovery after a 10.8% collapse in 2020. However, working hours have fallen, most of the jobs recovery comes from the public sector and there are 259,000 furloughed jobs (ERTE, 125,000 and 134,000 self-employed without activity) counted in the employment figure.

The November figures are not “record” nor “extraordinary” as the government trumpets.

Between November 2019 and November 2021, the Government has increased enrollment in the public sector by 211,800 people. In that same period, affiliation to the private sector has fallen by 68,133 people, according to data from the Ministry of Labor.

In November, there are almost 70,000 fewer affiliated people in the private sector than two years ago, and there are 125,000 workers in furloughed jobs (ERTE) and 134,000 self-employed in cessation of activity.

Furthermore, the last day of November 110,000 jobs were destroyed, equivalent to the entire average increase in social security affiliation of the month, all accroding to Ministry of Labor data.

The Government boasts of an ’employment record’ where 60% is public employment and furloughed jobs without activity (which count as “employed” in Social Security affiliation figures), while 3.2 million people remain unemployed.

Another very worrying factor, which the INE has reflected in its GDP analysis: hours worked in the third quarter fell 10% compared to the previous quarter and 2.6% compared to the third quarter of 2019.

Of the more than two million contracts signed in November, only 14% of the total are permanent, while 86% are temporary.

Of the new effective affiliated to the Social Security, excluding ERTE and cessation of activity, 78% are from the public sector between February 2020 and November 2021. Between November 2019 and 2021, it is 100%, since net private jobs have been destroyed.

There is nothing to celebrate in a country that, among the large economies, is only behind Turkey and Brazil in the Okun Misery Index, with 20.17%. And with the highest unemployment rate in the European Union. High unemployment and high inflation.

Spain's Fake November "Employment Boom"

This is serious because Spain’s public accounts are devastated. A government with the largest structural deficit in the European Union and a debt of more than 120% of GDP cannot disguise the employment figures by hiring in the public sector.

The euphoria is worrying when the very document of the Ministry of Labor reflects that the number of jobseekers is much higher: In November there are 4,992,251 jobseekers of which only 1,285,559 are considered “employed.” A figure of 294,422 appears as “with limited availability” and 229,583 as “unemployed jobseekers-TEASS”.

In other words, among those without employment who indicate in their application special working conditions (only at home, telework, abroad, etc.) and unemployed job seekers (DENOS) there is a group of more than 523,000 unemployed people who do not appear in the official unemployment data.

No country with 14.5% unemployment and hundreds of thousands of jobless counted as employed should promote as a ‘record’ or ‘spectacular’ such a poor bounce in employment doped by massive public hiring. Greece did the same and we all know how that ended.

About Daniel Lacalle

Daniel Lacalle (Madrid, 1967). PhD Economist and Fund Manager. Author of bestsellers "Life In The Financial Markets" and "The Energy World Is Flat" as well as "Escape From the Central Bank Trap". Daniel Lacalle (Madrid, 1967). PhD Economist and Fund Manager. Frequent collaborator with CNBC, Bloomberg, CNN, Hedgeye, Epoch Times, Mises Institute, BBN Times, Wall Street Journal, El Español, A3 Media and 13TV. Holds the CIIA (Certified International Investment Analyst) and masters in Economic Investigation and IESE.

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