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Economy in Brief

Employment in Spain Surpasses 20 Million in Q4; Foreign Workers Increase Share of Jobs
by Carol Stone January 26, 2007

The number of employed workers in Spain passed 20 million in Q4, a record and a new milestone. The Spanish labor market continues to impress with its vigor. Growth rates are moderating a bit, but conditions remain strong overall. The unemployment rate was 8.3%, seasonally adjusted, the same as in Q3 and the lowest since Q2 1979, more than 27 years ago. Labor force participation increased to 58.6%, also a record for this data, which began just over 30 years ago; this rate has gone up about a percentage point a year for the last five years.

We wrote about Spain's unique labor market last October, on the release of Q3 data. We noted then that the "industry" sector was holding up in Spain, even as it was declining elsewhere in Europe. In Q4, Spanish industry employment firmed, so it now has 31,000 more jobs, 0.9%, than in Q4 2005. European-wide data are not yet available for Q4, but through Q3, they were running 1.0% below a year ago. In other Spanish activity, the service sector had slower growth in Q4, "just" 4.3% year-on-year; the year as a whole was up 5.1%, the third year in the last four with more than 5% growth in service sector jobs. The real star is construction, as is easily evident in the second graph. Job growth there has picked up this year, with 8.3% in Q4 over the year earlier. For all of 2006, construction jobs increased 7.9%, the fastest in five years.

Another striking feature of the Spanish labor market is the participation of foreign workers. It may be that other countries are experiencing this phenomenon, but we have not been aware of it. Foreigners in Spain who are of working age (over 16) constitute 10.2% of that age segment of the total population, but they are 13% of the employees. While they have a higher unemployment rate than the population as a whole, 12.0% versus the total 8.3%, they are far more active in the labor market, with a participation rate of 77.6% compared to the overall 58.3%. Clearly immigrants come to Spain to look for work and persist in trying to get it.

Seasonal adjustment of Spain's employment and unemployment series is done by Haver Analytics. These series are in Haver's "G10" database. Other data, especially that on foreign workers, is carried in the SPAIN database, the "country-sourced" database in which data are presented in the style in which they are published by the national statistical sources.

SPAIN Q4 2006 Q3 2006 Q4 2005 2006 2005 2004
Employment (Millions, SA) 20.01 19.81 19.32 19.75 18.97 17.97
  Industry 3.33 3.26 3.30 3.29 3.28 3.21
  Construction 2.64 2.58 2.44 2.54 2.36 2.25
  Services 13.13 13.02 12.59 12.97 12.34 11.52
Unemployment Rate (%, SA) 8.3 8.3 8.7 8.5 9.1 11.0
Participation Rate (%, SA) 58.6 58.4 57.7 58.3 57.3 56.3
Foreign % of Working Age Population (NSA) 10.2 9.9 9.0 9.8 8.5 --
Foreign % of Employment (NSA) 13.0 12.7 11.3 12.5 10.9 --
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