Fynsa
In our country, the vast majority of us who live here earn our income from work, i.e., from wages. A rather smaller percentage also receives income from capital (stocks, real estate, etc.). In this context, the health of the labor market is crucial to understanding the dynamism of economic activity, especially that linked to domestic demand.
It is no news to anyone that the world of work has been stagnant for some time. This does not mean that jobs are not being created or that we are going through a crisis, but in many sectors we have seen growth in production that is not matched by proportional increases in the workforce, as was historically the case. In the extreme, sectors such as agriculture today operate with 24% fewer workers than before the social outbreak, while in the same period the GDP of the agricultural sector has grown by 12% in real terms (over 11% of the total GDP in that period). As a whole, the national economy today uses proportionally fewer workers than it did five years ago.
There may be many reasons: accelerated automation due to mobility restrictions during the pandemic, increased labor costs, lower investment in labor-intensive sectors, etc. Whatever the main culprit, the point is that today we have 600,000 fewer jobs than we should have, considering the economic and demographic growth (mediocre, but still growth) of the last five years. The stagnation is due to the fact that there has been no indication over the past 12 to 24 months that this gap is going to narrow.
Although the monthly data published by the INE present some problems for analysis at the margin, the truth is that over a broader period we have seen with concern a slight worsening of the market. No longer stagnation, but deterioration. In this sense, the rise in the unemployment rate from 8.7% to 8.8% in the last mobile quarter reflects this situation, being 0.3 percentage points higher than the same period of the previous year. Even controlling for seasonality, the rate continues to increase.
Year-on-year job creation reached 0.2%, the lowest since April 2021, driven by a small increase in female employment, while male employment remained unchanged. In the same period, the labor force grew by 0.6%, both figures below the increase in the working-age population (0.9%), the unemployed (4.3%) and the inactive (1.5%).
While wage growth may help to partially offset this scenario, the trend is not encouraging going forward. And, before the typical response of some to these analyses comes out: no, we are not happy about this, it is not in our favor, and it does not respond to any hidden agenda.. Unemployment is too serious a drama to take credit for it, especially when more than 600 thousand families are finding it increasingly difficult to put bread on the table.
