The data for activity in the last few months have been encouraging and the quarter-on-quarter change in GDP for 2013 Q3, which was positive after nine quarters of negative figures, was especially relevant. What is most important, however, is the fact that the underlying trend that the Spanish economy has finally taken up is clearly positive. Given this situation, the natural question to ask now is: when will jobs start to be created?
According to the latest figures from the National Accounts system, in 2013 Q3 the year-on-year change in the number of employees in terms of full-time equivalent jobs was –3.2%. It might therefore seem that any recovery in employment is still a long way off. But, in fact, the figures for Social Security contributions in the last two months have improved considerably: in November, the year-on-year change in the number of workers registered with Social Security was –1.4%, 1.9 p.p. above the figure for 2013 Q3. Should this trend continue, 2014 Q2 could well see a slightly positive year-on-year rate of change in employment.
Comparing the number of employees in one quarter with those in the same quarter the previous year helps us to examine the trend in employment without the strongly seasonal nature of the labour market distorting our analysis. However, it does not reveal any short-term changes in trend. To do so, the seasonally adjusted series must be used and, in this case, the news is more encouraging: in 2013 Q4, the seasonally adjusted quarter-on-quarter change in employment might already be slightly positive.
In the Focus «Job creation will come at differing speeds», published in last November's Monthly Report, we commented that, in general, the quarter-on-quarter growth rate required in GDP for the Spanish economy to generate employment is between 0.3% and 0.4%. Our forecast scenario provides 0.2% quarter-on-quarter growth in GDP in 2013 Q4, although we cannot rule out this being slightly higher. Moreover, the strong containment in employment seen over the last few
years, together with the notable recovery in confidence occurring the past few months, might have helped to speed up improvements in the labour market.
In any case, irrespective of the exact month or quarter to see the first positive growth rates in employment, all the evidence suggests that this is near. However, it is also true that employment's recovery will probably be slow. The deleveraging process, both public and private, and the adjustment pending in the real estate sector will not allow the economy to quickly reach growth rates close to its potential. The OECD has called for additional efforts to be made in order to minimise the impact of a slow recovery in the labour market and maximise its capacity to recover. Specifically, it has recommended a further cut in dismissal costs and an improvement in active employment policies. Along these lines, the government has passed new measures to make part-time contracts easier, cut the number of employment contracts (from forty-two to four) and modified the Social Security mutual fund system to guarantee its transparency and reduce unjustified absenteeism.