Wednesday, November 02, 2016

Employment "Inefficiencies": The Seasonality Problem

A conference in Brussels has been discussing Spain's labour market and its employment situation. Under the title of "strengthening the coordination of social services and employment in Spain - experiences and new opportunities", various experts have been considering how Spain can address "significant inefficiencies" in employment policies. Fundamental issues include the way in which the labour market is split so markedly between long and short-term employment, the need to protect the unemployed who are denied benefits, and the need for social services and employment policies to align in order to promote employment and training.

On the face of it, things are very much better on the employment front, but the drop below the 20% mark at national level for the first time in six years disguises the massive reliance on seasonal employment: 27% of the labour market is temporary, and this temporary status clearly does nothing for its sense of job security.

One of the areas that the Brussels conference has been looking at is the coordination at regional level between employment and social services. The capacity for these services needs to be increased. This assessment will ring bells in the Balearics, where the government has been pursuing policies to try and get the longer-term unemployed back into the labour market. The conference, while noting that there needs to be protection for those who lose their benefits, has nevertheless criticised a general policy of managing benefits at the expense of active policies to get people working.

The regional government has also been seeking to improve benefits, as with its social income scheme, one that has been widely publicised and yet which has benefited comparatively few people; far fewer than the government had suggested that it would. Although the Balearics have means of direct fundraising, the overall ability of the regional government to fund anything is inextricably linked to the system of tax revenue distribution, something that the Balearic government considers unjust.

What the conference is getting at, however, is how public spending should be prioritised. Should it go towards improving benefits or should it be for employment schemes? It should be for both, but the conclusion is that there has been far more of the former rather than the latter. Ultimately, however the pie is divided up, if there are to be greater regional efforts, then regional financing has to be reviewed in light of what these efforts might be. For the new administration of Mariano Rajoy, three of its greatest challenges are thus highlighted: policies to further reduce unemployment; policies to reduce the dependence on short-term working; and regional funding.

Boastful headlines referring to Balearic employment leadership and so therefore the lowest rate of unemployment are misleading. They obscure the fact of so much short-term working and job insecurity. The boasts may well continue into the Christmas period; not because of tourism but because of the need for shop and warehouse personnel, drivers, and call-centre staff. Set against this requirement, however, is the fact that construction demands are not expected to be as great as they have been over the past couple of winters. Seasonality is everything in the Balearics, be it because of tourism, retailing, building (much of it in tourist areas prohibited during the summer) and agriculture.

The employment figures will always tend to be presentable, therefore, and it does need pointing out that the underlying rate of unemployment in the Balearics is well below rates in other sun-and-beach regions, such as Andalusia and the Canaries. But however hard the regional (or national) government can work, whatever policies for coordination are arrived at, however much regional funding there might be, can the cycles of seasonal employment ever be disrupted to significant extents in order to give the workforce quality and secure long-term jobs?

There is another Gadeso survey. Its findings are not surprising but they are still disturbing. As Mallorca and the Balearics wave goodbye to a record season, the survey reveals that more than half Mallorca's hoteliers believe that profit has either stayed the same or gone down. For the complementary offer (restaurants, etc.), the news is even worse. Only 12% have had a more profitable season: all-inclusives, lower spending power, a short season are all blamed. And despite the boastful employment headlines, half the hoteliers say they haven't created new jobs, while 79% in the complementary sector have not. What jobs there are, it is admitted, are primarily short-term.

This isn't anything new. The imbalance in the labour market has existed for decades. Whether it can truly ever be overcome has to be debatable. For as long as labour market requirements are driven by seasonal demand, there won't be any genuine change. The Brussels conference can talk all it likes about improved coordination and greater regional employment and social services capacity, but if employment remains wedded to this seasonal demand, there aren't the jobs available.

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