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A doped job market

The Minister of Social Security, Josà © Luis Escrivá, said a few days ago in an interview with the newspaper ‘Financial Times’ that the unemployment forecasts of the OECD and the Bank of Spain that placed unemployment in Spain by over 20% at the end of 2020 “had completely failed”.

And technically he is right, because according to the Labor Force Survey (EPA) that we learned this Thursday, the unemployment rate at the end of last year was 16.13% in Spain, two and a half points more. s that in 2019, but very close to the forecast of the Government itself and very far from that of the Bank of Spain.

But in practice, the unemployment rate in Spain is much higher and is closer to the estimates of the entity chaired by Pablo Hernández de Cos. Because, according to the EPA itself, at the end of last year there were some 900,000 people in Spain in temporary employment regulation files (ERTE), which the statistics consider as employed although in reality they are ‘temporarily unemployed’: workers who they are unemployed for a season – collecting from the Sepe – until the situation of their companies is resolved.

If we add those temporary unemployed, who according to the statistics are employed, to the column of unemployed, we have that the figure would rise to 4.7 million people and the unemployment rate in Spain would be 21%, much closer to the forecasts of the Bank of Spain than those of the Executive.

The reality of the number of unemployed in Spain at the moment is between the 3.7 million “official” unemployed and the 4.7 million people who, being able to work, do not.

Thus, we have a labor market ‘doped’ by ERTE, which, by the way, is not an invention of Yolanda DÃaz or Fátima Baà ± ez, but has been regulated since 1995. Nobody knows how many of Those 900,000 workers will go into unemployment in the coming months and how many will return to activity, although in view of the situation it cannot be

optimistic, because the vast majority of ERTEs occur in the service sector and the evolution of the pandemic suggests that this year is not going to be the year for the recovery of hospitality and tourism.

For example, the EPA reflects some recovery in the labor market in the last quarter of 2020 thanks to the lift in mobility before the third wave of Covid-19 arrived. A situation that will change to much worse in the beginning of 2021 with the worsening of the sanitary perspectives and restrictions. In a few days we will see the evolution of employment in January … and what awaits us at least until the summer.

That is the first question to ask when making forecasts about the behavior of the labor market in 2021: how many of the workers in ERTE, the current 900,000 and those who will come, will return to your companies?

Because, as their name suggests, they are a temporary solution that cannot be prolonged, even if the ERTEs are initially necessary as an urgent measure to contain layoffs. There will come a time when the employer will have to decide whether to definitively terminate the contracts that are now on hold. It only remains that we begin to notice the effect of vaccines as soon as possible.

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