More Jobs in Spain, but Only Temporary Ones

MADRID — The Spanish government said Tuesday that an unexpected drop in unemployment in May was one of the best pieces of economic news since the start of the crisis, but the data showed that temporary hires accounted for much of it.

The number of people registered as unemployed declined by almost 2 percent, or 98,265 people, compared with the previous month, according to government statistics. Stripping out seasonal hires in areas like tourism and agriculture, the number of unemployed only dropped by 265 people.

Roughly 6.2 million people are out of work in Spain, and unemployment stands at about 27 percent.

The data suggest that Spain is increasingly turning into a two-tier labor market, as some employers hire people back on cheaper short-term contracts while the work force on permanent contracts, already at its lowest level since 1997, continues to fall.

Still, José Manuel Soria, the industry minister, welcomed the data as “the best we have seen since the crisis started.” Prime Minister Mariano Rajoy said that the “good news” on the unemployment front vindicated the government’s economic policy as “the adequate one,” even as austerity measures have led to mass street protests and have seen Mr. Rajoy’s popularity reach a record low.

Spain has been on the front line of the euro debt crisis for two years, and the deteriorating economy has pushed unemployment to more than double the European Union average. Last week, the Organization for Economic Cooperation and Development forecast that Spain’s jobless rate would continue to rise and surpass 28 percent in 2014. Most economists also expect unemployment to peak around that level amid weakening domestic consumption caused by a prolonged recession and a credit squeeze that continues to hurt businesses.

Still, analysts at Barclays Capital said the latest employment data, coupled with recent figures showing an improvement in manufacturing, suggested that Spain would come out of recession early next year. “We think that the latest labor market statistics support our view that the worst phase for the Spanish economy may now be over,” Barclays wrote to investors on Tuesday.

Antonio Argandoña, an economics professor at the IESE business school, called the May unemployment data “a small satisfaction” but warned that it would be “catastrophic” if such a seasonal improvement led the authorities to shelve further measures to encourage companies to hire more workers.

Over all, only about 7 out of 100 people who came off the rolls of the unemployed last month managed to find permanent jobs. But Engracia Hidalgo, the secretary of state for employment, said the government was not particularly preoccupied about what kinds of jobs were being offered. “What is important now is that people find a job and start to work,” she said.

Article source: http://www.nytimes.com/2013/06/05/business/global/more-jobs-in-spain-but-only-temporary-ones.html?partner=rss&emc=rss