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ECONOMY

Spain’s unemployment rate rises for first time in a year

Spain's first-quarter jobless rate rose for the first time in a year, official figures showed Thursday, mainly due to a lull in the tourism sector.

Published: 27 April 2017 14:24 CEST
Spain's unemployment rate rises for first time in a year
Jobless queue outside a job centre in Madrid. Photo: AFP

Unemployment from January to March 2017 stood at 18.7 percent, the national statistics institute INE reported.   

This represents a slight increase from the previous quarter when the jobless rate came in at 18.6 percent after having dropped continuously since the first three months of 2016.

At the end of March this year, Spain counted 4.25 million people without employment, the INE said, adding that the services sector — and to a lesser extent industrial jobs — had been particularly hard hit.

The services sector, which includes hotel and restaurant trade, saw 105,000 more people out of a job in the first quarter, it added.   

Spain's tourism sector is a major engine for growth in the country, but it depends on seasonality and short-term contracts.   

This year, Easter week – a major holiday in Spain that generates many jobs – fell later than previous years and was not included in the first quarter.   

According to the INE, over a quarter of all jobs were short-term in the first quarter, while more than 15 percent were part-time.    

The Eurostat statistics agency says Spain is the country with most short-term contracts in the European Union — a situation that critics say has created instability for many people who go from one contract to another, including highly specialised professionals like surgeons.

And while unemployment has gradually dropped from a high of close to 27 percent at the beginning of 2013 when the economic crisis raged, it is still twice the eurozone average and remains the second highest rate in the European Union after Greece.

The unemployment rate among young people aged 19 to 25, meanwhile, remains high at 38.3 percent.

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

Published: 30 May 2023 15:46 CEST
How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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