Pace of decline in Spain’s jobless rate likely to have slowed in Q2

The rate of drop in Spanish jobless rate is likely to decelerate from second quarter onwards. According to a Societe Generale research report, the jobless rate is expected to have reached 20.8 percent in the second quarter following a sharp decline in first quarter to 21 percent. In spite of the huge decline, the jobless rate continues to be quite above NAIRU (estimated at 15 percent). Youth unemployment in the first quarter had reached 43.9 percent.

Moreover, the share of temporary workers, despite the measures executed to lower labor market duality, continues to be at a high level, around 25 percent of total employment as compared with 14 percent in the European Union. Most of the new job creation has been represented by temporary contracts in the past two years.

“Looking ahead, we expect the labour market to improve further, albeit at a slow pace, only falling below 20 percent early next year and remaining above 18.5 percent until 2020,” added Societe Generale.