Employment deepened fall in July with a special impact on young people and people over 65

The labor market recorded another month of sharp decline, as a result of the impacts on the economy of the coronavirus crisis.

According to the INE Employment Survey, in the May-July moving quarter, 1,837,400 jobs were destroyed in the last 12 months, which is equivalent to a 20.6% drop, a drop that is unprecedented in the current data series (which starts in 2010), nor since there are data on this variable (1966). For its part, the number of people who left the workforce totaled 1.5 million in the same period, which is equivalent to an annual decline of 15.6%, an also unprecedented figure.

With this, unemployment during May-July rose to 13.1%, the highest record in the current series and the highest rate reported since March 1986. As in previous months, the mass exit of people from the labor market helped contain unemployment. In fact, if the unemployed were added to the potential labor force (that is, people who are not looking for a job, but would take one if offered) the combined rate would reach 30.2%.

Another alternative calculation is to add the unemployed with the workers with contracts suspended by the Employment Protection Law. If the data from the Ministry of Labor is considered, which speaks of about 520 thousand employees in this situation, the unemployment rate would be around 19.5%. Now, if, in an extreme exercise, it is considered that the 520 thousand suspended jobs are not going to be resumed, then the number of jobs lost in the last year reaches 2.3 million.

In addition, since the beginning of the coronavirus crisis, the number of jobs lost has reached 1,990,000.

All in all, there are some positive lights. This is what Clapes UC researcher Juan Bravo indicates: “Although we are in a very serious labor crisis, at least signs of stabilization are beginning to be observed. In addition, we must consider that in August the partial quarantine lifts began in various communes, so from the next figures we should gradually begin to see a moderation in the falls in employment ”.

For his part, the director of the UC Survey Center, David Bravo, affirms that “concentrating on employment, a further deterioration is shown. The employment rate falls from 45.6% to 45%, it seems to stabilize or reduce the fall. But the data that we presented three weeks ago (at UC) showed an employment rate of 42.3%, which is why it would be prudent to wait until we said we hit rock bottom ”.

According to the survey database, people between 15 and 24 years old lost 42.7% of their jobs in the last year, followed by those over 65, with 38.1% of their jobs. lost jobs (see graph). Regarding the employment rate, in people between 15 and 24 years old it reached 15.2% in July, that is, practically 1 in 7 young people of working age is doing so. The rate is also 11.1 points lower than a year ago.

By nationality, a very relevant pact is seen in foreigners, whose unemployment rate reached 15.7%, 2.9 pp more than among nationals.