Of the 900,000 jobs destroyed in the last fortnight of March, during the crisis caused by the coronavirus in Spain, more than two thirds were temporary. Specifically, 613,250 workers with temporary contracts, while the decrease in affiliates with permanent contracts was 223,353 people. The setback in employment has been the largest in history in a single month and once again highlights one of the biggest problems in the Spanish labor market: the high timeframe. When the economic situation worsens, and even more in the face of a crisis of this caliber, the adjustment of employment comes from the hand of storms, with the rapid destruction of employment for the most vulnerable workers.
It is not the first time it happens. The Minister of Inclusion, Social Security and Migration, José Luis Escrivá, pointed out on Thursday how the proportion of temporary employment destroyed is similar to that of the last economic crisis, after the bankruptcy of Lehman Brothers, and recalled that the structure of the market Spanish labor has hardly changed in this time.
However, the decline has now been very rapid, unprecedented in an unprecedented crisis. The job destroyed only in 14 days of this crisis by COVID-19 is the same as the job eliminated in 101 days, five months, in the Great Recession, Escrivá has warned. “Everyone knew what was going to happen. This is a very extreme version of a slowdown or a recession. If there is a complete stop in demand, a lot of temporary employment goes away,” explains Ángel Talavera, chief economist for Europe at Oxford Economics .
The unions had warned for their part that many companies were not including temporary workers in the main mechanism to prevent job destruction, the ERTE (temporary employment regulation files), despite the advantages approved by the Executive for this tool. employment adjustment.
Ángel Talavera points out that the COVID-19 crisis is “a very extreme case”. “All the countries of the world are falling in drastic data of use. Those of the USA seem errors. That also is necessary to put it in context. In Spain it is happening for once what happens in the whole world”, indicates Talavera.
But it is that, in Spain, there is a lot of employment susceptible to this rapid “adjustment”. Temporality, the proportion of temporary workers over total employees, is 26.3%, according to 2019 EPA data. In other words, one in four employees in Spain has a temporary contract. Although the rate fell in the past crisis, it grew again with the economic recovery. Last year was the first year in which temporary employment decreased a few tenths since 2014.
A novelty of the current moment with respect to the past crisis is the greater facility to let contracts die and not to renew them, given that they are getting shorter. The temporary contracts that have grown the most since 2007 are those of less than one week, followed by those of less than fifteen days.
Regarding the groups most affected by temporary employment are young people, with a temporary employment rate of 46.7% among people between 25 and 29 years old and 66.6% among those between 20 and 24 years old. . By sex, women present a higher proportion of temporary contracts, 27.2%, compared to 25.4% of men.
If you look at the economic sectors, there are notable differences. Construction, the sector that lost the most jobs in relative terms in the last two weeks of March, has an enormous temporary nature, with 38% of its workers with this type of contract. The Services sector presents a rate of 25.4% and industry, of 19.3%.
The hiring that will not be in April
Raquel Sebastián, a researcher in labor economics in the department of economic analysis at the Complutense University, points out that “to understand the intensity of these numbers, you must also analyze job creation. A large part of the net destruction does not come only from dismissal, but because an existing contract is no longer hired or is not renewed. “
In this sense, all eyes are on next month, April, in which Easter is celebrated this year. During the holidays at this time of the year, tourism and hospitality registered significant job creation, much of it seasonal and of discontinuous permanent workers who enter the labor market to cover this season.
This year everything points to the fact that there will be hardly any incorporations given the measures of confinement and stoppage of economic activity that, although they do not have an end date yet, many voices point out that they will lengthen beyond April 12. “We just have to pay attention to Italy, where it all started ten days before. When they begin to 'get confused', then it will be our turn, but it will not be quick to go back out on the street normally,” fear Raquel Sebastián.
Minister José Luis Escrivá has stated that, within the uncertainty that exists, his estimates suggest that most of the “adjustment” in employment has already occurred in March. Ángel Talavera believes that the April data will be “as bad or worse than the March data”, because although it is possible “that the additional adjustment of employment is a little softer, because the companies have already removed all the work they did not need “, next month there will be no hiring expected in that period.
In Raquel Sebastián's opinion, the records that await us in April will be even worse since “the hospitality sector will continue to be paralyzed and, in turn, construction, which worked in March, will no longer be able to work in April.”
Keys: how long the crisis lasts and social protection
For the two economists consulted, many questions about the extent of this crisis remain to be determined and depend above all on one question: how far is confinement and the health crisis. That will determine the way out of the labor or economic crisis, says Ángel Talavera.
“With a long duration, we can see mass bankruptcies in the business sector. Now we assume that all ERTE employees will return to normal activity, but in a scenario where companies close, these people do not return. The big risk is a crisis that lasts too long, in which the business fabric cannot endure and there are no jobs to return to, “argues the chief economist for Europe at Oxford Economics. The expert believes that Spain will take more measures to face this crisis, possibly in the field of taxation, with deferrals in the payment of some taxes that companies are demanding so much.
Raquel Sebastián also points to the way out of the crisis thanks to the consumption of citizens once movement restrictions have passed, for which the social protection of the population is essential. The Minister of Labor, Yolanda Díaz, has underlined that in this crisis a “social shield” is being built to guarantee the income of families, something that did not exist in the Great Recession. In the case of temporary workers without the minimum contribution to receive unemployment benefit, the Government has created an extraordinary subsidy of 430 euros for a month, but which will only be accessible to those employees with contracts of at least two months duration that have been extinguished during the alarm state.