Good employment data with clouds on the horizon
BarcelonaSpain and Catalonia continue to be European exceptions regarding the performance of the economy and job creation. With the data for March presented by the Ministry of Labour, Spain reaches for the first time in history the mark of 22 million Social Security affiliates, 3.4 million more than in 2018, when Pedro Sánchez arrived at Moncloa. In the case of Catalonia, the record was reached last summer, with 3.9 million affiliates, then it fell slightly and is now about to recover (3.88 million). Unemployment also decreased by 23,000 people in the State and by 3,777 in Catalonia. At the end of the month, we will have the data from the EPA survey and, therefore, a more accurate snapshot of the unemployment rate.
Sánchez, evidently, wanted to boast about this data and appeared in a video wearing the Spanish national team's jersey. Similarly, various popular regional presidents, such as the Andalusian Juanma Moreno Bonilla or the Valencian Juanfran Pérez Llorca, have also given triumphalist speeches about the results, which contrasts with the pessimism and negativism that permeates the messages of their leader, Alberto Núñez Feijóo.
Among economists, there is a strong debate about how these figures should be interpreted. From those who claim they are the product of a production model intensive in cheap labor, mainly focused on tourism, to those who argue that Spain is today the main engine of European growth. A significant portion of the new contracts signed in March, however, correspond to the Easter season, which arrived early this year and with very good weather. There is also no doubt that the bulk of these three million-plus new affiliates are foreign immigrants. The arrival of this contingent of young people of working age has allowed many sectors to survive, basically the primary sector and construction, which were already seeing the writing on the wall due to the lack of generational replacement.
This good data, however, does not yet capture the impact that the war in the Middle East is having on the world economy and which are dark clouds on the horizon. The closure of the Strait of Hormuz, the pressure weapon that Iran is using against the United States, has hampered the flow of 20% of the world's crude oil and is already causing an energy crisis and a price increase that, in the long run, can lead to stagflation, that is, a period of high inflation and low growth. This is the ghost that is currently haunting the chanceries of the whole world and explains the multiple diplomatic movements that are underway to stop the conflict.
It is not yet clear what the impact of the crisis will be in Catalonia and Spain. Rising prices seem inevitable, but it is also true that the tourism sector could benefit from the fact that direct competitors in terms of tourism, such as the Persian Gulf countries, are losing attractiveness with each passing day. In any case, administrations must prepare for the worst-case scenario and not be dazzled by good employment figures.
