Unemployment falls back below six million in the second quarter

With Spain still locked in the grip of its longest recession since the restoration of democracy, the country was waiting anxiously for some signs of light at the end of the tunnel. It arrived on Thursday in the shape of the National Statistics Institute¡¯s (INE) Active Population Survey (EPA) for the second quarter, when the economy created jobs ¨C albeit of the poorest quality ¨C and the number of people out of work fell below the sickening figure of six million, which was reached for the first time ever at the start of this year.

According to the EPA, the number of people in work in the period April-June increased by 149,000 to 16.783 million, while the number of those who were unemployed fell by 225,200 to 5.977 million after reaching a record 6.2 million in the previous three months. The jobless rate fell to 26.26 percent from 27.16 percent in the first quarter.

Social Security affiliation numbers and jobless claims had pointed to something of an improvement in the labor market in the second quarter. Estimates by the Bank of Spain released earlier this week also showed that the pace of the decline in activity had slowed in the second quarter, with the contraction in GDP narrowing to 0.1 percent on a quarterly basis from 0.5 percent the previous three months.

However, it remains to be seen whether the upswing in the labor market is of a permanent nature rather than a function of the increase in temporary hiring that habitually takes place ahead of the main tourist season. Eliminating seasonal factors the number of jobs created in the latest quarter was only 13,000.

Notably, the number of foreign workers leaving the ranks of the unemployed was 145,400, more than half of the fall in the total number of jobless. That might partly reflect foreigners disgruntled with the sorry state of the labor market opting to leave. Possible evidence of this was seen in the size of the working population, which shrank by 76,100 in the quarter to 22.761 million, thereby accounting for part of the fall in the jobless rate. The occupation rate has fallen by over half a percentage point in the past year to 59.54 percent.

Of the jobs created, 162,000 were temporary and mostly part-time, while the number of workers on permanent contracts fell by 50,400. The percentage of workers on temporary contracts rose by one percentage point to 23.12 percent. The number of self-employed workers increased by 37,100.

Employment in the public sector was largely stable, while in the private sector it increased by 151,600 to 13.940 million. Despite the improvement in the second quarter, the number of people out of work was still up 284,500 when compared with the same period a year earlier.

The number of unemployed fell across the board, but particularly in the service sector where 157,900 fewer people were out of work. The drop in industry was 37,500, 25,500 in construction and 24,200 in agriculture. However, the number of first-time jobseekers increased by 23,500.