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Executive summary and conclusions Inf labour market

Executive summary and conclusions

One of the main problems in Spanish society is the inability of the labour market to satisfy the needs of households as their main source of livelihood. The so­cial development of any country largely depends on how people of working age find employment, whether the type of employment found guarantees suitable working conditions and whether the remuneration received is enough to meet the needs of households in this regard.

This second report on social needs in Spain measures the degree to which these needs have been met in re­cent years. The main sources that enable assessing its performance in the three areas highlighted above are analysed using a broad set of indicators. These sources are the Encuesta de Condiciones de Vida (Living Con­ditions Survey), both cross-sectional and longitudinal data, the Encuesta de Población Activa (Active Popula­tion Survey), the Encuesta de Estructura Salarial (Sala­ry Structure Survey), all from the Instituto Nacional de Estadística (National Institute of Statistics), and the Eu­ropean Working Conditions Survey, from Eurofound.

A broad set of indicators is used for each of the three aforementioned challenges -access to employment, appropriate working conditions and adequate salary-, including some of those commonly used to assess em­ployment, as well as other new ones which make it pos­sible to have a view which better reflects the evolution of the labour market from a social-needs perspective. These new indicators make it possible to look at two key aspects in more depth: the low work intensity or underemployment of a significant number of those in the labour force and employed and its concentration in certain households.

Furthermore, using information from different time points enables assessing how changes in the econom­ic cycle have affected the social needs related to the labour market. These changes are illustrated with data from the boom prior to and during the crisis, and in the subsequent recovery phase. The different indica­tors all point in the same direction: practically all of them worsened in the crisis and the progress achieved in the short period of time since it ended has not been able to offset that damage.

The report also compares the situation in Spain with that in Europe by selecting indicators representative of each of the three challenges. The information analysed reveals that the crisis had more significant and lasting effects on the issues of underemployment, in-work poverty and long-term unemployment in Spain than in other European countries. In addition to these prob­lems we find that the skills mismatch with the position held, is also greater than in the European context.

Another section of the report looks at how public pol­icies have responded to the social needs related to the labour market. Different indicators are provided, which summarise the coverage of these needs provided by public intervention through different instruments. The information compiled shows that in relative terms Spain is one of the countries in the European Union that spends most on employment policies. However, the protective intensity of this spending falls in the context examined, and there are significant issues with cover­age of unemployment through monetary benefits.

Summarising the information through a basic system of indicators, leaving the data to almost speak for them­selves and qualifying the narrative with brief specific comments that help to interpret them, represents a new approach in the landscape of social reality studies. It is now up to the reader to browse through the pages of the report and compile their own narrative, reexamining the usual opinions and assumptions in light of a new and broad set of objective information. 

LABOUR MARKET

The social needs related to the labour market are measured in this report. As this is the main means of social inclusion in contemporary societies, some basic rights and needs are at stake. All people and households face three essential challenges:

1. Having access to employment: is the most basic need related to the labour market, as it is only if you have access to a job that you can achieve the appropriate social and personal development in the work environment throughout your life.

2. Having appropriate working conditions: only if the jobs found are conducted in appropriate working conditions in relation to stability, number of hours, physical or psychological demands, and with the possibility of balancing work and family life, is the need for employment properly satisfied.

3. Having an adequate salary: one of the main characteristics of employment from the perspective of covering social needs, as well as being able to perform it in appropriate conditions, is for the hourly wage it provides to be enough to provide a decent quality of life, making it possible to avoid poverty and income insecurity.

1. Executive summary

The most important

  1. Unemployment: The unemployment and underemployment rates in the Spanish labour market are significantly higher than those seen in most European Union countries, during both expansion phases and, especially, recessions. In 2018, one in four young Spaniards aged 20 to 29 is unemployed.

  2. In-work poberty: Both during the expansion and recession stages of the economic cycle, Spain stands out for its high levels of in-work poverty and job insecurity. In-work poverty is especially linked to a lack of working hours and the concentration of unemployment, more than to low hourly wages. In the expansion phase of our economy, when 92% of the labour force were employed, the median hourly wage was lower than in the recession that came afterwards.

  3. Over qualification: Almost one worker in every two says that their job requires higher or lower qualifications than they have, and the recession has only exacerbated this issue. With the recovery of the economy, over-qualification has decreased slightly. Three in four employees whose skills are sufficient for the job say they are over-qualified.

  4. Uncertainty: The general dissatisfaction with work is closely related to the economic cycle, increasing in expansions, when employment is abundant, and decreasing in recessions, when employment is limited. One in ten employees feel uncertainty regarding their work schedule, which makes it more difficulties to balance work and family life.

The most important

  1. In-work poverty and job insecurity among Spanish workers clearly exceed European averages, during both times of expansion and, especially, recession.

  2. The crisis led to an increase in unemployment, underemployment and in-work poverty. The current position in the Spanish labour market is much worse than the EU country average.

  3. General dissatisfaction with work is similar in Spain to the EU average during expansions and, given its procyclical nature, is currently lower than the European country average.

 

The most important

  1. Spain is one of the European Union countries that spends the most on employment policies relative to its GDP. However, spending per unemployed person is less than in countries with a lower income level.

  2. As the crisis progressed, the coverage of the unemployment benefit system decreased; the current rate is near a record low for the last two decades. The impact of these benefits on the poverty rate has barely changed, despite the drastic increase in unemployment.

  3. During the crisis, the minimum wage increased only slightly in real terms between 2006 and 2010 (from €606 a month to €653, to then fall back down to €622 in 2014). Its real value remains well below the current minimum wage in neighbouring countries.

2. Conclusions

1. Failure in the labour market

The Spanish labour market has some of the most significant failures of all EU countries, both in expansion and recession phases of economic cycles. During recessions, the general unemployment rate increases greatly, and during expansion stages there is an increase in the number of employees with shortterm contracts who suffer great job insecurity and frequently enter and exit the labour market. During the last recession, Spain was the European country experienced the greatest increase in the unemployment rate for each percentage fall in production. As a result, practically all indicators studied have worsened since the recession, without the progress achieved in the short period of time since the end of the crisis leading to a substantial recovery of the losses registered.

2. High youth unemployment

Youth unemployment in Spain is high in the European context and, despite it still being very concerning that almost one in three young Spaniards aged 20 to 29 are unemployed, the situation is clearly better than it was five years ago, when the unemployment rate for that age bracket was 41%.

3. Poverty and insufficient working hours

Both during the expansion and recession stages of the economic cycle, Spain has registered high levels of in-work poverty and job insecurity. The in-work poverty and job insecurity of Spanish workers greatly exceeds the European average both in expansion and, especially, recession stages. In-work poverty in our country is linked to two key factors: underemployment due to insufficient hours, and unemployment and its concentration in certain households.

4. Average hourly wages

The hourly wages of people employed in Spain are average for countries in the European Union, although it is important to note that during the expansion phase, in 2005 for example, when 92 per cent of the labour force was employed, the median hourly wage was lower than it was afterwards and during the recession. This figure indicates that periods of prosperity have a positive impact on employment for groups with low salaries, who in another economic environment would be unemployed.

5. High underemployment and long-term unemployment

The impact of the recession on the Spanish labour market has increased underemployment, inwork poverty and, in particular, the duration of the periods of unemployment compared to the European average. The number of people who live in households in which half or more of the unemployed labour force have been searching for a job for over a year has practically tripled from 2005 to 2017, increasing from 6 to 14.6 per cent. In these three aspects, the situation in the Spanish labour market is currently much worse than the average in other EU countries.

6. Educational mismatch

The level of skills mismatch with the position held among people employed in the Spanish labour market is high. Almost half of Spanish workers say their job requires higher or lower qualifications than they have. Of these, three in four say they have more qualifications than necessary for the job they perform. It is important to note that the recession has exacerbated this problem, although recently over-qualification has decreased while under qualification remains the same.

7.Dissatisfaction with the job linked to the economic cycle

General dissatisfaction with work is closely related to the economic cycle, with dissatisfaction increasing in expansion phases when employment is abundant, and decreasing in recessions when employment is scarce. Furthermore, one in ten workers has uncertainty in relation to their work schedule, which increases the difficulties in balancing work and family life. Compared with Europe, what stands out is that in expansion phases the general dissatisfaction with work in Spain is similar to the European Union average, although this dissatisfaction is currently below average for European countries.

8. High spending on employment policies, but low spending on active policies

Spain is one of the European Union countries with the highest percentage of spending on employment policies relative to GDP. This feature can be seen both in expansion periods and in those with the destruction of jobs, and is linked to the fact that it repeatedly has an unemployment rate above the European average. This position in the European rankings does not however correspond to an equivalent protective intensity, as the figures on spending per unemployed person show. Especially noteworthy in the European context is the low Spanish spending on active policies per unemployed person, even below that seen in countries with a lower level of income.

9. Decrease in the coverage rate of the unemployment benefit system

The coverage of unemployment situations by the system of benefits specifically designed to cover this risk is strongly affected by the reforms implemented over the past two decades, which made entering the system more difficult, lowering both the amounts and the duration of the benefits. As the crisis progressed, the coverage offered by the system decreased, with the system becoming overwhelmed when the unemployment rate reached its highest values. The coverage rate is currently close to a record minimum for the past two decades, with just over half of unemployed people receiving benefits. One of the most negative results of this reduction in coverage is that the impact of these benefits on the poverty rate has barely changed, in contrast to what happened in most European countries during the crisis. This is despite the significant fall in the income of households most affected by unemployment in Spain.

10. Low, but increasing, minimum wage

Although the minimum wage directly affects few workers, its evolution reflects the concern of public decision makers to ensure a minimum level of well-being through wages. During the crisis, this fell in real terms and barely registered changes until 2017, when significant nominal increases were implemented. The real value of the minimum wage, however, is still well below the current figures in neighbouring countries.

3. Bibliography

BÁRCENA-MARTÍN, E. & MORO-EGIDO, A.I. (2013). "Gender and Poverty Risk in Europe". Feminist Econo­mics, 19(2): 69-99.

CARD, D. (2011): "Origins of the Unemployment Rate: The Lasting Legacy of Measurement without Theory", American Economic Review: Papers & Proceedings 2011, 101:3, 552-557.

CANTÓ, O., CEBRIÁN, I. & MORENO, G. (2016 ). "Crisis y brecha de riesgo de pobreza por género".  Estudios de Economía Aplicada 34-1: “Economía de Género”.

CEBRIÁN, I. & MORENO, G. (2008). La situación de las mujeres en el mercado de trabajo español: desajustes y retos. Economía industrial Nº 367: 121-137.

DEL RÍO, C. & ALONSO-VILLAR, O. (2014). "Mujeres ante el empleo (y el desempleo) en el Mercado laboral español, 1996-2013". AREAS, Revista Internacional de Ciencias Sociales, nº 33 (Desigualdades de género en España: continuidades y cambios).

EDELMAN, P.B. & HOLZER, H.J. (2013). "Connecting the Disconnected: Improving Education and Employment Outcomes among Disadvantaged Youth". Institute for research on Poverty, Discussion Paper No. 1412-13, Uni­versity of Wisconsin-Madison.

Eurofound (2017). Overview Report, 6th European Working Conditions Survey, 2017 Update.

Eurofound (2017). In-work poverty in the EU, Publica­tions Office of the European Union, Luxembourg.

GRADÍN, C., DEL RÍO, C. y CANTÓ, O. (2010). "Gender wage discrimination and poverty in the EU". Feminist Economics, vol. 16(2): 73 - 109.

MUÑOZ DE BUSTILLO, R., FERNÁNDEZ-MACÍAS, E. & ANTÓN, J.E. (2011). Measuring more than money. The Social Economics of Job Quality, Edward Elgar publi­shing.

International Labour Organization (ILO) (1982). Resolutions Concerning Economically Active Population, Employment, Unemployment and Underemployment, adopted in the 13th International Conference of Labour Statisticians, October 1982, paragraph 10.

International Labour Organization (ILO) (2017). World Employment Social Outlook, Flagship report, Geneva.

VAN KLEECK, M. (1931). "Charting the course of emplo­yment". In Committee of the President’s Conference on Unemployment, Business Cycle and Unemploy­ment: New York: Mc Graw-Hill.

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