Fynsa
For some time now, we have been raising concerns about the behavior of the labor market and its deterioration, even though this was not necessarily reflected in the unemployment figures published monthly by the INE.
The decline in job creation in the private-sector wage-earning sector, the substantial drop in labor demand from companies, and the continued weakness in wages all pointed to a labor market showing signs of a slowdown, in line with what is happening in the rest of the economy.
The data we received regarding the rolling quarter ending in March is beginning to change that picture. It’s not that the detailed figures have gotten worse right now, but a 0.4 percentage point increase in the unemployment rate from one month to the next (to 8.8%) is something anyone would associate with bad news.
It is true that this is not necessarily the case—sometimes unemployment rises because more people enter the labor market in search of work due to improved prospects—but in this specific instance, the assessment is not positive. The rise in unemployment was due to all the wrong reasons: compared to the previous period, 21,000 people entered (or re-entered) the labor market. However, on balance, 24,000 jobs were lost, resulting in a net increase of 45,000 unemployed people. This is the largest increase in the number of unemployed since July 2020.
By category, the situation does not look much more promising. In February, there was a notable increase in the number of public-sector employees, which may have partially “masked” the decline in jobs in other categories, such as the private sector.
That was not the case this time, as the number of salaried workers fell by 26,000 (23,000 in the private sector and 3,000 in the public sector), a figure that doubles if we include the smaller number of jobs in other minor sectors. All of this was partially offset by self-employment, which increased by 28,000 jobs.
The outlook for the coming months is not particularly encouraging. Sector-specific data continue to show weakness, with the retail and mining sectors deteriorating, although there has been a marginal improvement in manufacturing.
The construction sector—the industry that has lost the most jobs over the past year—continues to show a downward trend for the coming months. Furthermore, although some of these trends may have changed in the wake of the pandemic, we are entering months marked by negative seasonal trends in employment, which historically have been accompanied by higher unemployment rates.
Therefore, it is quite likely that unemployment will exceed 9.0% in the coming months. That said, it is therefore increasingly important to send clear signals to the private sector so that, through increased investment, new jobs can be created or existing ones maintained.
On the other hand, increased spending on public investment could help offset the decline in specific sectors. Taking care of the bottom line, as they say, is vital in times like these.
