Unemployment rose by 2.2% (60,404 people) in January as Spain continues to grapple with declining productivity.
advertisementThe total number of unemployed people last month reached 2.77 million. This was mainly due to an increase in the number of unemployed people in the service sector by 58,721 people and an increase in the number of unemployed people in the agricultural sector by 1,256 people.
The industry added an additional 440 job seekers. On the other hand, the number of unemployed people in the construction sector decreased by 1,234 people.
Net regular employment also increased by 38,357 people in January, bringing total employment to 20.88 million, according to a separate report from the Ministry of Social Security.
Why is Spain suffering from increasing unemployment?
One of the main reasons for the increase in unemployment in Spain is due to the country’s strict labor market regulations, which are also seen in the housing and pharmaceutical markets.
This creates a number of complications for employers in hiring and firing employees as needed, resulting in a dual labor market in the country. In other words, there are two main types of employment contracts that are commonly seen: “regular indefinite-term contracts” and “fixed-term employment contracts.”
As with immigrants, young unskilled and semi-skilled workers therefore bear the brunt of unemployment and are most likely to be employed on temporary contracts. This is mainly because they are most in demand in seasonal industries such as tourism, construction, and hospitality.
These sectors can do very well during peak or boom times, but they are also the sectors most affected during off-peak times, recessions, demand slowdowns, or other times such as pandemics.
Spain continues to grapple with productivity challenges
Another important reason why Spain has a consistently high unemployment rate compared to other countries Europe This is because the country continues to face low productivity, even though most employees work longer hours than in other European countries.
A large part of Spain’s economy is also driven by small and medium-sized enterprises, which often deal with capital and human resources issues.
According to Professor Arturo Lahera of the Complutense University of Madrid, as reported by El País newspaper, “Profits are always limited because these companies have low productivity, and the investment rate is low. And the investment rate is low. A decline means fewer jobs.”
Living cost support measures continue
Spain’s headline inflation rate rose to 3.4% in January, while core inflation fell to 3.6%. The country’s gross domestic product (GDP) in the fourth quarter of 2023 also increased by 0.6% from the previous quarter.
Spain also recently announced that it would continue to extend its cost-of-living support package, especially as the country has been hit hard by rising prices due to the Russia-Ukraine war and the coronavirus pandemic.
These measures include making public transport subsidies available to all segments of the population, not just young people and minors. Value added tax (VAT) on products such as vegetables, edible oil, pasta and fruit will also be reduced.