A gradual improvement can be seen in the labour market in different dimensions. In 2015 Q2 the rate of job creation speeded up to 3.0% year-on-year and the unemployment rate fell to 22.4%, accumulating a drop of 4.5 pps since its peak in 2013 Q1. Similarly, after years of substantial increases, the long-term unemployment rate is also showing signs of stabilising (see the Focus «On long-term unemployment in Spain» in MR 02/2015). Another relevant dimension that reveals the state of the labour market is under-employment, understood here as workers employed part-time who would like to work full-time; i.e. involuntary part-time employment. Let's see how this kind of employment has evolved over the last few years.
In 2007, before the crisis, the percentage of part-time employees out of the total (the part-time employment rate) was 11.6% in Spain, far below the rate of the euro area, namely 19.1%. By 2014 this part-time employment rate had increased by 4.3 pps to 15.9%. The rate also increased in the euro area during this period, albeit to a lesser extent (3.1 pps). However, if we distinguish between voluntary and involuntary part-time employment, a markedly disparate trend can be observed (see the first graph). In Spain, the rise in part-time employment was concentrated entirely in the involuntary type, increasing by 6.3 pps to 10.1%. In fact, voluntary part-time employment fell between 2007 and 2014, perhaps due to the effects of the crisis, causing part of the female population to lengthen their work day to offset the unemployment situation of other members of the household.1 In the euro area, however, the rise in part-time employment occurred both in the involuntary and in the voluntary type, although the share of involuntary part-time employment also increased because of the recession.
This sharp rise in involuntary part-time employment in Spain during the crisis suggests that some companies facing economic difficulties reduced their employees' hours to adjust their workforce. Indeed, the labour reform of 2010 introduced measures to increase the internal flexibility of firms,2 and the legislative changes approved in 2013 made part-time employment easier.3 This kind of adjustment, which may be appropriate during a recession as it can help to limit the number of actual job losses, also took place in the euro area but less intensively because the crisis was not so severe. Moreover, it is possible that the part-time employment rate does not reflect the fact that some of this reduction in hours has occurred in full-time jobs.
The most recent data indicate that the involuntary part-time employment rate in Spain has stabilised (see the second graph). This stabilisation is a result of a rate that has remained constant in the services sector and fallen slightly in industry. On the other hand, the involuntary part-time employment rate continued to rise in construction. With regard to the voluntary part-time employment rate, Spain's levels are much lower than in the euro area as a whole, either because its institutional framework does not encourage such employment or because, at least during the recession, families could not allow themselves to reduce the hours they worked. In the coming quarters, as the economic recovery takes hold and the improvement in activity is passed on to the labour market, it is likely that this change in direction in the involuntary part-time employment trend will consolidate and spread to all productive sectors, while voluntary part-time employment should start to rise again.
1. See «The Crisis and Its Aftermath: a Stress Test for Societies and for Social Policies», Society at Glance 2014, OECD.
2. In RDL 10/2010, the permitted range of reduction in the work day for economic, technical or organisational reasons went from 33%-50% to 10%-70%. RDL 3/2012 and 1483/2012 clarify the economic conditions under which companies can take advantage of greater internal flexibility.
3. See RDL 16/2013.