For the past decades, Spain has been plagued by high unemployment and low employment.
Even though Spain's national institute of statistics (Instituto Nacional de Estad﨎tica - INE) I'd capitalise the name - National Institute..
announced its lowest unemployment rates since 1979 in October 2005 and the fact that every I'd move in October 2005 to after announced
third new job within Europe has been created by Spain, Spain's main problem remains its
labour market. A key question for economists and policy makers is why does Spain has an
exorbitantly high unemployment and low employment rate compared to other OECD
countries? Before looking at the specific factors that may have led to high unemployment and
low employment, a few key definitions need to be stated and understood. First, employment
and unemployment will be defined. Second, statistics in regard to the Spanish labour market
will be analysed. Third, this essay seeks to explain why certain groups of people suffer from
high unemployment and low employment, respectively.
There are several ways to analyse the labour market. One way is to look at the unemployment
rates. It is the most common measurement of the labour market and quoted by the media
(ILO). A person is considered as unemployed who is willing and able to work but is unable to
find a paying job. The unemployment rate is calculated by dividing the unemployed workers
by the total of civilian labour force. The civilian labour force includes the unemployed and
employed (WIKIPEDIA ENCYCLOPEDIA, 2005). It is also common to compare total employment
as percentage of the working age population. The employment-population ratio is used as an
indicator to provide information on the ability of an economy to create jobs. The labour force
participation rate is another measurement. It shows the proportion of an economy's working-
age population that is economically active. A person is defined as active, when he or she is
either in employment or unemployed. Inactive people are neither in employment nor
unemployedｸ these are people who are not seeking for a job in the last four weeks or are not have not been seeking
able to start working or who just don't want to work (NATIONAL STATISTICS, 2005). In order
to examine the distribution of the economically active population the labour force can be
analysed by sex and age group. In order to compare national unemployment and employment
rates, the OECD standardised rates are commonly used. The data is based on national
statistics and adjusted in order to ensure comparability. Analysing Spain's labour market and
its development during the last decade, its is important to take into consideration that the INE it is
has changed its definition of unemployment in 2002. Since then a person is defined as
unemployed who is registered as unemployed and actively in contact with the registration
office at least once a month. Previously a person just had to be registered (INE, 2005). The
redefinition has some effects on the labour market statistics: "Some calculations estimate that
・due to this new definition ・between 400,000 and 500,000 people are no longer counted as
unemployed, but are, instead, now considered economically inactive. Consequently, the rate
of unemployment from December 2001 dropped from 12.8% to 10.3%." (GLOBAL POLICY
NETWORK, 2005). Table 1 highlights the differences regarding participation, employment and
unemployment rates of the 4th quarter in 2001. For both genders the rate of unemployment
differs -2,5%, while the rate of employment differs +2,4%. The participation rate increased by
Following this essay examines different statistics regarding the Spanish labour market. Next, this essay will examine
Over more than a decade Spain's unemployment rates remained higher than the average for more
OECD-Europe and the OECD-Total rates. But Spain's unemployment rates continually
dropped, from 19,8% in 1994 to 10,8% in 2004 (table 2). About 50% of the economies show
an increase in their unemployment rates, whilst the other half of economics could decrease saw a decrease in
their unemployment rates during the past decade. The INE announced Spain's lowest
unemployment rates since 1979 in October 2005. Graphic A shows how unemployment rates
developed since 1990. have developed
In comparison to other European countries like Austria (4,5%), Ireland (4,5%), Norway
(4,4%) or United Kingdom (4,6%) Spain suffers still from high unemployment (table 2). The
new European Union members Poland and Slovak Republic are the only countries which have
far higher unemployment rates than Spain in 2004. Spain shows in the second quarter of 2005
a unemployment rate of 9,6% (table 3).
A look at the employment rates shows that in Spain just 62% of people of working age had a
job in 2004 (table 4). Corresponding to the OECD-Europe (61,5%) and OECD-Total (65,3%)
rates Spain remains averaged. But there is still a big gap between Spain and the best average
performing countries like Iceland (82,8%), Switzerland (77,4%), Sweden (73,5%) and
Spain's labour force participation rate is 69,7% in 2004. That means about 30% of Spain's
working aged population is economically inactive. Compared to the OECD-Europe and
OECD-Total rates Spain is averaged.
Analysing the development of employment, labour force participation and unemployment
rates comma I calculated the difference between each rate of 1990 and 2004. Whilst the
unemployment rate dropped down to 31,7% in regard to 1990, the employment rate increased
just 9,5% and the labour force rate increased just 13%. That means less fewer *I wouldn't use less + plural n fomawriting) people were counted
as unemployed relative to people actually counted as employed or economically active after a
period of 14 years in 2004.
It is interesting to compare Spain's labour market statistics for each gender, because the
figures show a significant difference between men and women. Table 5 shows that 74,9% of
men of working age had a job in 2004, therefore Spain is within the OECD-Total average
(75%). In Comparison the employment rate of women is far lower (49%) and remains 6,8%
below the OECD-Total average (table 6). A look at the development of both rates from 1990
to 2004 shows that the employment rate of men increased just +4,2%, whilst the employment
rate of women dramatically increased +54%.
In regard to the labour force participation rate 81,6% of men are counted as economically
active, whilst just 57,7% of women are recorded as economically active. Even though the
smaller number of economically active women relative to men, the labour participation rate of
women has increased since 1990 +36,7%, whilst the participation rate of men differs just +0,4%.
The unemployment rate of for men shows 8,2% and differs +1,5% from the OECD-Total
average, whilst the unemployment rate for women (15,1%) is far higher and more than double
the OECD-Total average (7,2%). But a look at the development since 1990 shows again, that
the unemployment rates of women decreased stronger than the rates of men. While the
unemployment rate of women decreased 38,9%, the unemployment rate of men decreased
29,9% since 1990.
It can be summarized that in Spain especially women suffers women suffer disproportionally from high unemployment and
show a lower employment rate as well as a lower labour force participation relative to men.
But previous statistics illuminate also that the employment and labour force participation
increased much stronger than these of men and the women's unemployment rate decreased
more dramatically relative to the men's rate.
Analysing the unemployment rates of different age groups, its becomes evident that the
unemployment rate of younger people (15 to 24 years) is more than double the unemployment
rate of middle-aged (25 to 54 years) and older people (55 to 64 years) in 2004.
In terms of employment comma the younger and older aged-groups show far lower rates than the
middle-aged group. Viewing the development of employment from 1990 to 2004 comma... it is
remarkable that the employment rates in the middle-aged and older group increased, while the
employment rate of in young-aged group remains since 1990 almost at the same low level.
In regard to labour force participation the middle-aged group shows the highest percentage of
active population (80,6%) in 2004. The younger and older aged-groups record again a far
lower participation (49,2% and 44,4%). While the participation in the middle-aged and the
older-aged group increased since 1990, the percentage of the younger-aged group are even
lowered in 2004 than in 1990 (table 7).
Thus Spain's young and old population suffers mostly from unemployment and shows the
lowest employment and labour force participation rates.
A look at Spain's labour market in regard to age and gender shows that young women have
the most problems to find a job (tables 8 and 9) and not even 30% of older-aged women are
Labour market statistics regarding education illuminate that especially people, who have less
than a an upper secondary education suffer from unemployment (11,2%) and show the lowest
labour force participation relative to people who have a upper secondary or tertiary education.