Boletin nº33_English.cdr

33
April | 10
Spanish Labour Market Monitor
Presentation
The March data allow us to complete our estimate of the results of the forthcoming EPA (Labour Force Survey) for the first
quarter of 2010. The data lend themselves to varying interpretations: though they clearly reflect the favourable seasonal
factors, they still do not serve to clarify the outlook for the year as a whole. On the other hand, this issue of the SLM Monitor
includes a detailed look at the problem of the education of Spanish workers, which reveals worrying mismatches with
regard to the allocation of talent to actual occupations. These mismatches are indicative of the structural difficulties that
must be overcome if the modernisation of the Spanish economy is to be achieved in a very unfavourable labour context,
which demands immediate measures to get the unemployed back to work.
Key points
The March data show that recessionary factors remain strong. In
terms of employment, they lead the Afi-AGETT SLM Indicator to
predict YoY falls of less than 3% in the remainder of the current
quarter, which from April onwards would put it above 18.4
million, the same level as at the end of 2004.
3
2
1
0
-1
-2
-3
-4
-5
-6
-7
-8
Monthly SLM employment forecast
(year-on-year rate)
Jul-09 / Jun-10 (*)
Jul-08 / Jun-09
-0.3
-0.8
-1.4
-2.1
-3.1 -2.6 -2.5
-3.7 -3.0
-3.0
-4.0
-4.8
-7.4 -7.3 -7.0
-6.6
-6.1 -5.6
-5.7
-6.5
-7.1 -7.1
-7.3 -7.4
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Source: Afi, (*) Apr-10 /Jun-10: forecast
However, in the first quarter of 2010, employment is expected to
have fallen by 284,000 compared with the previous quarter, i.e. a
YoY fall of 3.8%, noticeably smaller than that of 1Q09, though clearly
recessionary.
Employment, EPA (Labour Force Survey)
(year-on-year rate)
4%
3.4
3.1
2007
2008
2009
2010
2.4
1.7
2%
0%
Forecast
·The Afi-AGETT SLM Indicator sees the YoY fall in
employment at below 3% from May onwards,
which would put the aggregate above 18.4 million,
with slight MoM increases, reflecting the seasonality
of the period.
·Employment would fall by 284,000 in 1Q10
compared with the previous quarter (-3.8% YoY)
and unemployment would increase by almost
230,000, taking the unemployment rate to 19.9%.
·The March data confirm that recessionary factors
have been significant in the first quarter, with
unemployment rising by 243,000 and Social Security
enrolment falling by 209,000, compared with the
preceding quarter. Nevertheless, the YoY rate of
deterioration in the labour market is ever more
moderate.
·Despite the higher level of workers' education, in
4Q09 40% of the unemployed still had a low level
of education, hindering gains in productivity and
competitiveness in the Spanish economy.
·Services have the highest percentage of qualified
workers, while in agriculture and construction there
continues to be a high proportion of workers with low
levels of education.
·Among the different occupations, a reasonable
pattern of distribution of workers by educational
level can be observed in general, as those
occupations requiring better educated workers do
make greater use of more qualified people, as in the
case of Professionals and
Technicians and
associated professionals (see statistical categories
on page 3).
·Worrying mismatches are evident with regard to
the allocation of talent to the different
occupations, indicating the relative waste of the
qualified human capital available in the Spanish
labour market. Thus, 3.5% of workers with a high
level of education (a total of 236,000) were in
unqualified jobs in 4Q09.
·There are important regional differences in
workers' educational levels, with the Basque
Country and Madrid being the regions with the
highest proportion of qualified workers. These
differences are partly linked to variations in economic
structure.
·Significant regional differences are also
observed in the mismatch between qualifications
and occupations, with Navarre having the best
match.
The Afi-AGETT SLM Indicator
-0.8
-2%
-3.0
-4%
-3.8
-6%
-8%
-6.1
-6.4
-7.3
3Q
4Q
Source: EPA (INE) and Afi forecasts
1Q
Assuming that our labour force forecast (a YoY fall of 0.8%, -56,000
during the quarter) is correct, this would mean the unemployment
rate reaching 19.9% and an increase of almost 230,000 in
unemployment, taking the total to 4.56 million. Employment per
se is not expected to cause the unemployment rate to continue
rising in the coming months, as seasonal factors are likely to cause
small increases in employment. However, depending on the
strength of the recession after July, unemployment could again
increase, since there are hundreds of thousands of discouraged
workers who could start actively looking for work again in the
coming months.
Spanish Labour Market Monitor - April | 10
02
“The March data indicate that the labour market recession continues,…”
March ended with an increase of 36,000 in registered unemployment, though the seasonally adjusted figure is considerably worse
(an increase of 59,000), confirming that the recession was still a significant factor in the first quarter, when there was an
increase of 243,000 in unemployment. The favourable seasonality typical of March did not take full effect, as only the start of Holy
Week fell within the month.
Registered unemployment (monthly change in thousands)
200
150
100
50
In 1Q10, enrolment declined by 209,000, which though not
as bad as in 1Q09 (a fall of 473,000), is still very high at this
stage of the recessionary cycle and significantly higher than
in 1Q08 (a fall of 58,000).
0
-50
2007
-100
Average Social Security enrolment increased by 22,457
compared with February, though after seasonal adjustment
there was a decline of almost 35,000, even more than in
February (a fall of 32,000), indicating that the labour
recession is still ongoing and that the recovery in
employment has yet to occur.
01
02
03
2008
04
05
2009
06
07
08
2010
09
10
11
12
Fuente: SPEE
Average Social Security enrolment
(monthly change in thousands)
200
In YoY terms, March continues the trend of increasingly
moderate variations in registered unemployment and
average Social Security enrolment, with 15.6% and -2.6%
respectively.
100
0
-100
-200
-300
2007
2008
2009
2010
-400
01
02
03
04
05
06
07
08
09
“…though the YoY rate of deterioration of the
labour market is increasingly moderate”.
10
11
12
All economic sectors and labour categories reflect this
pattern of moderation, except the unemployed with no
previous employment, who have doubled their growth rate
compared with March 2009. It is most notable in those which
have fared worst since the onset of the labour crisis: the
construction sector and male, under25 year old and foreign
workers.
Fuente: INSS
“The educational profile of the working population is increasingly high, though there are notorious
differences between economic activities, with the highest level in the services sector,…”
In 4Q09, 36.1% of the population in employment (over 6.7 million) had a high level of education (tertiary education), a percentage
which has grown strongly in recent years (at the start of 2000, the figure was 27%). Despite the improvement, 40% of those in
employment still have a low educational level (pre-primary, primary and lower secondary education), hindering productivity
gains. Moreover, there are important differences between economic activities, with a notably high percentage of workers with
low educational levels still in the primary sector, construction, some manufacturing industries, commerce and hotels and catering.
The activities with the highest percentage of highly qualified workers are Public administration, education and healthcare,
because entry is by examination, plus Financial and company services. The latter two sectors employed more than 50% of
highly qualified workers in 4Q09, whereas they provide 33% of total employment.
Distribution of economic activities according to highest level
of education attained. 4Q09 (%)
100
18
26
80
35
38
40
44
20
47
49
Manufacture of food, textile, leather, wood and paper products
59
3
24
24
21
40
30
29
23
52
40
20
1
75
26
62
Agriculture, forestry and fishing
2
56
22
60
Economic activities (NACE rev.1.1)*
0
38
36
4
Construction
5
Wholesale and retail trade and repair. Repair of motor vehicles,
hotels and food service activities
15
6
Transporting and storage. Information and communications
10
7
22
35
Extractive industries, refined petroleum products ,chemicals,
pharmaceutical products, plastics and synthetic rubber,
Electricity, gas, steam and air conditioning supply,
water supply, waste management. Metallurgy
Manufacture of machinery, electrical equipment and transport
material. Installation and repair of industrial machinery and equipment
Spanish Labour
24
22
21
20
0
8
7
6
3
Total
2
9
5
High
Source: Afi from EPA, Labour Force Survey, (INE) microdata
1
4
Medium
0
Low
8
Financial and company services, insurance, real state,
scientific, clerks and others
Public administration, education and healthcare
9
Other services
* EPA Microdata do not yet collect the change in NACE-09
April | 10 -
Spanish Labour Market Monitor
03
“… as well as among the main occupational categories, where the highest educational levels are
found among Professionals and Technicians and associate professionals”.
The educational levels of the working population shows significant differences between occupational categories, being very high in
Professional, where they represent 97% of total workers, and in Technicians and associated professionals, with close to 60%.
These categories include 58% of workers with a high educational level, whereas they represented 26.3% of total employment in
4Q09. Among the categories with the lowest percentages of qualified workers, apart from Elementary occupations and Plant and
machine operators and assemblers, were two, categories 6 and 7 (described below), in which, according to their very definition, the
educational profile should be superior to that observed. In general terms, there is a reasonable pattern, as those occupations
requiring better trained workers and where this factor is more productive do make greater use of better qualified personnel.
Distribution of occupational categories according to highest level
of education attained. 4Q09 (%)
100
2
Main occupation (ISCO-88)
12
23
36
80
40
35
47
29
60
60
64
69
74
37
24
97
24
37
40
34
59
23
41
20
40
36
23
22
28
19
17
14
0
2
3
4
1
Total
18
0
5
7
High
8
9
8
9
Medium
6
0
Armed forces
1
Legislators, senior officials and managers
2
Professionals
3
Technicians and associate professionals
4
Clerks
5
Service workers and shop and market sales workers
6
Skilled agricultural and fishery workers
7
Craft and related trades workers
8
Plant and machine operators and assemblers
9
Elementary occupations
Low
Source: Afi from EPA, Labour Force Survey, (INE) microdata
“Is there a good match between the qualifications required by occupations in the Spanish labour
market and the educational level of the employed population?”.
As it is complicated to establish exact equivalents between occupations and educational requirements, we have used several
indicators in our approach to the problem of overqualification. Thus, the first evidence of the mismatch between the tasks
carried out by the working population and their educational level is obtained by analyzing the distribution of occupations
according to the educational level of the population employed in each, as 9% of workers who do unqualified work (Occupational
category 9) are highly qualified. Similarly, in Category 6, which requires qualified agricultural and fishing workers, only 8% of
workers have the required level.
“There is a mismatch between qualifications and the type of work done, which indicates the relative
waste of the qualified human capital available in Spain”.
Secondly, we analysed, for workers in three occupational categories (2-Professionals, 7-Craft and related trades workers and 9Elementary occupations) the distribution of educational levels in three economic sectors (3-Construction of machinery, electric
equipment and transport supplies, 4-Construction, and 8-Public administration, education and healthcare) and we also found
evidence of the mismatch between the educational level achieved and that required by the job, demonstrating the relative
waste of trained human capital available in the Spanish labour market.
As the graph shows, in category 2, all the sectors analysed
present a high educational level, corresponding its
occupational characteristics, which would indicate that
there is no mismatch between workers' education and
the qualifications required for the job. However, in the
other occupational categories analysed, it is evident that
there are mismatches. In category 7, the percentage of
workers with higher education in the three sectors studied is
below the average for these sectors (see lower graph on
page 2), indicating that poorly qualified workers are doing
work that requires a higher level of education. The opposite
is observed when we analyse category 9, where we find
workers with a high educational level in tasks that do not
require it, pointing to a problem of overqualification in the
sectors studied, especially 3 and 8.
Distribution of occupational categories according to economic
activities and highest level of education attained. 4Q09 (%)
100
2
0
2
80
52
65
59
60
78
60
99
98
70
98
40
23
23
23
20
24
13
25
19
18
17
15
6
0
11
Market Monitor
Act. 3
Act. 4
Category 2
Act. 8
Act. 3
Act. 4
Act. 8
Category 7
Act. 3
Act. 4
Act. 8
Category 9
High
Source: Afi from EPA, Labour Force Survey, (INE) microdata
Medium
Low
04
Spanish Labour Market Monitor - April | 10
“There are significant differences in the educational level of the working population by region: the
Basque Country and Madrid have the highest percentages of qualified labour”.
The structure of the working population by educational
level shows important geographical differences. The
Basque Country has the highest educational level, with over
50% of the employed being highly qualified. Madrid follows with
nearly 44%, then La Rioja, Cantabria y Navarre, with over 40%.
The lowest educational levels are found in Extremadura and
Castile-la Mancha, where over 49% of workers have a low
level. In Murcia, Andalusia and the Balearic Islands, poorly
qualified labour also predominates.
País Vasco
Asturias
Galicia
34.9
44.8
Cantabria
36.1 39.8
24.1
20.3
37.1 40.8
22.2
27.5
Navarra
La Rioja
36.6
35.8 36.4
Aragón
43.9
Madrid
49.8
Extremadura
51.7
29.2
42.9
25.4
48.0
Andalucía
32.0
46.8
23.9
Level of education
High
29.3
26.3
27.5
Com. Valenciana
22.8
Canarias
Murcia
21.1
44.3
Medium
Low
Baleares
31.7
46.2
Castilla-La Mancha
Spanish average
40.0 36.1
24.3
28.7
21.5
19.2
36.7
39.1
27.8
22.5
28.5
Cataluña
34.1 40.2
36.5 41.2
25.7
22.2
27.6
These differences are linked, though not exclusively, to
differing economic structures, each of which needs a
qualifications profile according to its specialization. Hence,
more industrialized regions such as the Basque Country, La
Rioja and Navarre have a higher percentage of qualified labour,
as does Madrid, due to the predominance of advanced
company services. However, Extremadura, Murcia, Andalusia
and Castile-La Mancha, where the primary sector is more
important, require a lower level of education.
51.2
21.3
Castilla y León
40.9
Map 1. Distribution of employment
by level of education and region. 4Q09 (%)
Source: Afi from EPA, Labour Force Survey, (INE) microdata
29.8
25.9
“The mismatch between qualifications and occupations shows important regional differences: the
Basque Country and Cantabria have the highest percentage of qualified workers in unqualified
jobs”.
The mismatch between qualifications and occupations conceals significant regional differences. As already discussed, in
Spain as a whole, 9% of unqualified jobs (occupational category 9) are done by highly educated workers. By region, this
percentage exceeds 15% in the Basque Country and
Map 2. Qualified employment in unqualified jobs
Cantabria
in Spain by region. 4Q09
Cantabria, while it is less than 5% in Extremadura and Navarre.
Asturias
4.3 País Vasco
This appears to indicate that in some regions there is a poor
3.8
3.4
2.5
1.1
allocation of human capital, since it is employed in
Galicia
4.1 Navarra
inappropriate occupations and sectors. Nevertheless, this
La Rioja
2.6
3.8
could be deceptive, as the number of workers employed in
Cataluña
4.3
Castilla y León
unqualified jobs is not significant in some regions, where
Aragón
occupations requiring medium or high educational levels
3.2
predominate. If we analyse the distribution by occupation of
Madrid
4.9
highly qualified workers, in category 9 (poorly qualified
5.2
Baleares
2.7
4.0
jobs) we find 3.5% of the total for Spain as a whole, with
Com. Valenciana
Castilla-La Mancha
Extremadura
Murcia, Valencia and the Balearic Islands being the regions
with the highest percentages. However, in the Basque
% of qualified workers in
unqualified jobs
5.3
Country, category 9 absorbs only 3.4% of highly qualified
Spanish average 3.5
Murcia
3.5
labour. Navarre records the lowest percentage of qualified
% of unqualified jobs done by
Andalucía
qualified workers
workers doing unqualified jobs, reinforcing its positive result
>15.1
in the first indicator analysed here and establishing it as the
Canarias
10.1 / 15.0
4.5
region with the best match between qualifications and
8.8 Spanish average
8.1 / 10.0
occupations.
< 8.0
Source: Afi from EPA, Labour Force Survey, (INE) microdata
THE MONTHLY FOCUS
Education: the key to productivity and the root of the problem
It is often said that we have the best educated young generation in our history. And, I would add, so it should be!. The
education of the population, economically active or not, is the foundation on which company productivity and economic
competitiveness are built. But all that glitters is not gold: these qualifications would seem to be wasted when employed in
lower level occupations. There are too many qualified workers doing basic jobs in our country, even in the more advanced
regional economies. On the other hand, companies consistently complain that they cannot find the highly qualified technical
profiles that they need. There must be something very wrong with the educational planning in Spain and in young people's
educational incentives for this double paradox to continue intensifying over time. With spurious qualifications, however much
they may adorn the conventional indicators of human capital, all attempts to modernize our economy will not only be in
vain, but will increase frustration.
José A. Herce. Partner and Economics Director, Afi
Direction & coordination: Asociación de Grandes Empresas
de Trabajo Temporal (AGETT)
Realization and technical support: Consultores de las
Administraciones Públicas (CAP)
Asociación de Grandes Empresas
de Trabajo Temporal
www.agett.com