First of all, I am going to talk about the development of unemployment from the year 2011 where the number of unemployed reached 5,273,600 in the fourth quarter according to the Labour Force Survey, meaning the unemployment rate approached 23 % (22.85 %, double the average of the European Union). The youth unemployment rate approached 50 % (48.60 %). The number of jobs lost in Spain since the fourth quarter of 2007 was 2,669,400 jobs and the percentage of temporary contracts rose to 25%, one of the highest in the European Union.
The unemployment rate for the end of 2012 was 5,965,400 (26 % of the active Spanish population) according to the INE. The rise in unemployment in 2012 exceeded provisions made by the government to spend on unemployment benefits. Up until April of that year, the cost rose to 10,721 million euros, 3.64 % more than the same period in the previous year.
In the first quarter of 2013, the number of unemployed persons reached its worse figure, climbing to over 6,200,000.
If we go back to the olden days, specifically to the middle ages, the unemployment problem, as we know it today, did still not exist yet. There were unemployed citizens, however, anyone who did not work was considered lazy or homeless. In his book Idle Hands, Professor John Burnett explains that up until the 19th century, many English analysts identified the unemployed mainly as maladjusted and globe travellers that slept rough and wandered the streets at night.
Unemployment was discovered towards the end of the 19th century or at the beginning of the 20th. Special government commissions were formed in order to analyse it and to find a solution, such as the Select Commission of the House of Commons in Britain to target the “Dismay caused by the lack of jobs” in 1895. Unemployment had become an epidemic.
The rising awareness of this problem drastically increased, especially after the First World War. This battle had eliminated unemployment, but at the beginning of the 1920’s, the Western world went through one recession after another, reaching its highest point at the Great Depression, which from 1929 shook the world’s industrialised economies. After the Second World War, many countries experienced a new economic boom and unemployment decreased considerably. This is why it is permissible to say that the origin of the current unemployment problem goes way back to the mid 70’s. The labour market suffered another stumble as a consequence of the petrol crisis of the seventies. As a consequence of greater computerisation many jobs were lost. Unemployment started to increase amongst administration jobs, which in the past were considered to be safe.
There are four fundamental types of unemployment: structural; cyclical, frictional and monetary. In peripheral economies and in sectors which suffer periods of high and low activity (agriculture, hotel industry…) there is even a fifth type, seasonal unemployment. Structural unemployment technically corresponds to a mismatch between jobs offered by employers and potential workers. This type of unemployment is much more severe than the seasonal and frictional one. Also, it does not depend on time but on the absorptive capacity of labour force which has constant capital, whose accumulation promotes a rise in productivity of workforce and greater structural unemployment.
The main characteristics of structural unemployment are:
Cyclical unemployment: This type of unemployment occurs in cycles, it usually coincides with economic cycles and its consequences can lead countries with weak institutions to violence and eventually to civil disobedience. An example of cyclical unemployment is the global crisis of 1929.
Frictional unemployment: both frictional unemployment, through rotation and searching and unemployment caused by labour mismatch, due to discrepancies between the characteristics of jobs and employees, appear even when the amount of available jobs match the amount of people willing to work. It occurs when employees leave one job in search of a better one. Their unemployment is temporary and does not represent an economic problem, it is relatively constant.
Seasonal unemployment: it depends on the season due to seasonal fluctuations in the amount of job offered and the amount of workers. This term is also used to refer to the unemployment which occurs due to the fluctuant demand of certain activities such as agriculture. Long term unemployment: a long term unemployed person is someone who has been registered and seeking work constantly for over a year.
Open unemployment: it refers to people who did not work during the reference week, who actively searched for a job, in other words, they carried out some concrete actions in order to find a job and were available to start working immediately. Not having work; actively searching for a job and being available and willing to work.
FISCAL POLICY AND EMPLOYMENT
The way in which tax policies affect employment is a complex issue, which is why we need to carefully assess the effects of incentives and disincentives which entail public sector intervention. For instance, a well-designed unemployment benefit system not only provides an important network of protection for the population, but also allows workers to spend more time in search of more productive employment. However, at the same time, it can prolong the duration of unemployment, which would have side effects on potential economic production, because workers who have endured long term unemployment experience a depreciation of their human capital.
We can see the possible disadvantages of the social benefits more clearly in the effects of the job vacancy factor. We often hear about unconditional or unlimited pay from unemployment benefits being one of the main factors which discourage the search for employment. The latest statistics show us how employment in the tourism sector in Spain has gone up 5.8 % during the second quarter of 2014. The unemployment rate in this sector is 9.2 points below the average of the national economy which stood at 24.5 % in the second quarter of the year. A year ago, this national rate stood at 26.1 %
The number of employed people linked to this sector gone up 5.8 % between March and June, a figure reaching over 2.2 million workers, an increase of 123,105. In the second quarter, it accounted for 12.8 % of total employment in the Spanish economy. There were 2.6 million active employees working in tourist activities, a figure which is 2.9 % higher than last year, with 74,045 more active workers.
Employment in the tourism sector in the islands remains the key factor for their economies since 24.7 % of the total number of the employed work in tourism in the Canary Islands and 26.2 % in the Balearic Islands, above the national average which stands at 12.8 %.
DOMINGO PEREZ AUYANET President of the Association of Retirees from the Insular Building Society of the Canary Islands
