Fynsa
This week, we received the employment figures from the INEfor the rolling three-month period ending in March. This time, we learned that the unemployment rate—that is, the ratio of the unemployed to the labor force— reached 7.8%, 0.3 percentage points higher than in the rolling three-month period ending in February, and slightly above our expectations (7.7%). The rise can be attributed to an increase of 62,000 people (+0.7%) in the labor force, which could not be offset by the creation of 29,000 new jobs (0.3%). As a result, 33,000 people joined the ranks of the unemployed, bringing the total to approximately 744,000.
One could argue that this increase is bad news, but we know that relying solely on the unemployment rate to draw conclusions about the health of the labor market is an incomplete picture. First of all, we must not forget that monthly fluctuations are often driven by seasonal factors rather than underlying economic dynamics. To “adjust” for these effects, we can make a seasonally adjusted comparison or, alternatively, compare the figures with those from the same period the previous year. When we do this, we get mixed results: on the one hand, 452,000 people have entered the labor force over the past year, a figure more than offset by the 649,000 new jobs created. As a result, 197,000 people moved out of unemployment during this period. As a result, the unemployment rate fell by 2.6 percentage points over twelve months. On the other hand, compared to the previous month (seasonally adjusted), the labor force increased by 0.8%, exceeding the 0.7% rise in the number of employed individuals, leading to an increase in the seasonally adjusted unemployment rate, which rose from 7.7% to 7.9% (our own estimates). This continues to show that, although better than last year, the pace of employment recovery is clearly slowing, a trend also evident in qualitative surveys, such as the February business sentiment .
As much as the media has been touting it lately, there are still there are still approximately 266,000 jobs to be recovered to reach pre-pandemic levels, or 202,000 to reach the levels prior to the social unrest. However, to recover the jobs that would have been created—taking into account the growth of the economically active population as well as economic growth rates— we would be talking about 484,000 jobs, widening the gap from what was previously thought to be necessary to return to “normality.”
We have been warning about this situation for several months now, even when the economic growth figures and the strong job market recovery in 2021 blinded us to the more structural impacts that the social unrest and the pandemic on the country’s labor market. The sudden changes both events forced upon businesses altered companies’ workforce needs in terms of skills and training, not to mention that many processes were automated due to the difficulty of securing workers, given the mobility restrictions that were implemented. This is particularly important in the agricultural sector, as since March 2020, 102,000 jobs have been lost, making it by far the hardest-hit sector.
Temporary financial aid is useful during emergencies, but a country cannot rely on temporary aid. The best way to improve families’ social well-being, promote social mobility, and reduce inequality is to create more and better jobs, by providing the means to access them, but also by creating the conditions for companies to be able to offer them. Only then will each of us be able to have a job.
