Wednesday, December 6, 2023

Labor reform did not reduce unemployment, it only reduced permanent positions

The labor market will slow down after the effect of the reform initiated by Yolanda Díaz disappears, while the drop in the temporary employment rate that occurred last year stops in 2023. In the first three quarters of this year, this indicator stabilized at around 17%, according to the EPA, and between 14% and 15%, according to membership data. Therefore, beyond the reduction of the temporary number of employment, the three goals set in the 2022 labor reform are slowed down: the reduction of labor rotation flows “stopped in the short term”; the low impact of recessions on employment in the medium term has melted; the reduction in the rates of registration and withdrawal of membership that occurred in the first months of the application of labor reform “reached a level similar to 2014”; and the increase in productivity that the government set for itself in the long term decreased because the productivity of each employee decreased, which did not reach the level of 2019.

This is what analysts from Fedea and BBVA Research warned in the latest “Quarterly Labor Market Observatory”, which warned of a “clear” loss of momentum in job creation during the third quarter and the slowdown in economic activity,, and where «the hours worked in advance under the number of workers”

The head of economic analysis at BBVA Research, Rafael Doménech, saw “minimal growth” between two and three-tenths of members in the fourth quarter of the year, following the three-tenths that grew between July and September. This confirms the “strengthening” of the Spanish labor market, whose members will grow “at a slower rate”, putting the brakes on the “labor reform effect.”

In this sense, the researcher at Fedea, Florentino Felgueroso, warns that effective unemployment—the one that counts the real unemployed (unemployed, looking for work, and stopped permanent workers in periods of active unemployment)—almost maintains the same numbers before the approval of the reform. Thus, while the rates of registered unemployment—increases and decreases in unemployment compared to job seekers who are unemployed at the end of two consecutive months—fell “, especially since the beginning of labor reform”, the trends of effective unemployment—registered unemployment among more claimants with employment relationships, which include discontinuous permanent employees—”have”not changed. This is because intermittent work that used to be done on short-term contracts affected registered unemployment, but with the reform, intermittent work is now included in discontinuous permanent contracts. This, if they are registered as claimants during periods of unemployment, is not counted in registered unemployment but in effective unemployment. The flow of this group is greater than that of the currently registered unemployed. If we add them to registered unemployment to get effective unemployment, the flows will rise again and, therefore, the real unemployment rate will rise.

To demonstrate this statement, Felgueroso pointed out that “between October 2022 and October 2023, registered unemployment decreased by 156,000 people, while effective unemployment increased by 11,000.”

The Observatory also said that “productivity per hour worked was almost two-tenths between July and September. Both output and hours worked per employee moved from the level of 2019, while productivity per hour worked almost 0.8% higher. Therefore, Fedea and BBVA point out that the different evolution of employment and working hours is explained by the “limited improvement” of the working day and the increase of people working without working. “Working time and, above all, the number of workers exceeded the records before the pandemic” in Spain and the European Union as a whole. However, the aforementioned drop in intensity or momentum at work has reduced productivity per employee, “which has moved from the pre-pandemic level.”

In addition, the study highlights that the vacancy rate “increased to the highest level in the last thirteen years”, which for Fedea and BBVA Research “proves that the difficulties of making job matches continue to be high. ”

The report also warned that Spain is now the third country with the highest number of elderly unemployed, after the unemployment rate of the over-50 group has increased significantly. age, which already represents 45% of the unemployed and 27% of all unemployed in the European Union, according to data at the end of the third quarter of the year. “We are the country that has aged the fastest in recent times, and we will be the oldest in the coming years,” added Felgueroso. In this way, the elderly make up the majority of those registered as unemployed and surpass the youth in the Active Population Survey (EPA). Similarly, the gender gap observed among those over 50 years of age has been overcome in this age group, including immigrants, who “increase their weight among the elderly unemployed. “These events “raise new challenges for active employment policies, which must address groups that are more at risk of remaining in a situation of long-term unemployment.”

World Nation News Desk
World Nation News Desk
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