- The unemployment rate rises 0.32 points in the quarter, but is 2.33 points below a year ago.
- The number of people in work falls, although it remains above 20 million.
- The first quarter is seasonally weak, so the figure is best read as part of a trend and not in isolation.
The National Statistics Institute (INE) published the first-quarter Labour Force Survey (EPA) on 28 April 2022. The number of people in work fell by 100,200 from the previous quarter, 0.50%, to 20,084,700, while the number of unemployed rose by 70,900, or 2.28%. The unemployment rate stood at 13.65% of the active population, 0.32 points higher than at the end of 2021.
In year-on-year terms the picture is better: employment has grown by 878,000 people, or 4.57%, and the unemployment rate is 2.33 points lower than a year ago. By sex, the female rate was 15.44% and the male rate 12.04%. The figure comes with the war and inflation as a backdrop and with the labour reform already in force, which changed the rules on fixed-term hiring from 31 March. In a first quarter jobs are lost for seasonal reasons even in years of recovery, and this is worth remembering when assessing the figure.
How to read the EPA
The EPA is a quarterly household survey that classifies people according to their employment status using international criteria. It is not the same as registered unemployment at the employment services or social security affiliation, which are published monthly and measure something else. It is therefore normal for the three figures not to match: each answers a different methodology and purpose.
The first quarter is usually weak for seasonal reasons: contracts tied to the Christmas campaign end and tourism and agricultural activity have not yet taken off. It is therefore better to compare with the same quarter of previous years and with annual developments rather than with the immediately preceding quarter. Read that way, the labour market keeps a recovery trend, though with more uncertainty.
The effect of the labour reform
The new fixed-term hiring rules of the labour reform approved in December began to apply on 31 March, that is, just after the quarter closed. This is why the April survey cannot yet reflect their impact: the first effects on the proportion of permanent and permanent-discontinuous contracts will only appear in second-quarter data and later.
What can be seen is the context in which the reform is being applied: rising energy and raw material costs, inflation at multi-decade highs and less visibility on demand. For companies, this complicates workforce planning, because they have to decide on their hiring structure in an environment in which their costs and sales are harder to forecast. How quickly companies convert fixed-term contracts into permanent ones will be a key indicator in the coming reports.
What to review
Companies would do well to review their temporary workforce and check which contracts fit the new grounds, which should be converted to permanent or permanent-discontinuous and what renewal calendar they have. It is also worth updating labour cost forecasts, bearing in mind inflationary pressure on collective agreements and wage reviews.
For people looking for work or considering a change, the prudent reading is that the labour market continues to create jobs on a year-on-year basis, although at different paces by sector and region. Your employment adviser can help you adapt contracts and internal policies, and understand what the new data mean for your activity.
A weak quarter does not change the annual trend, but it is a reminder that workforce planning calls for prudence.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
