If Spain is the ugly duckling of the EU, why does it create so much employment?

The INE published unemployment data on Tuesday. Unemployment fell by 782,000 people, to 3.1 million, which means erasing the job destruction from the pandemic, as is the case with Social Security registrations, grew by 780,000, to the magic number of almost 20 million, well above the 19.2 million in February 2020.

Why is job creation going so well, if Spain is the ugly duckling of Europe? Its economy is among the furthest behind in the OECD, along with Greece’s; The pre-Covid Gross Domestic Product (GDP) will not recover until the end of the year and the debt and the deficit are among the highest in the Old Continent. Something does not add up. And especially considering that we are in the middle of the sixth wave, with an explosion of infections and an increase in hospital occupancy.

As they say, Not all that glitters is gold. When looking at the Social Security registration data, It is seen that the majority of job creation corresponds to the hospitality industry, with 180,169 new contributors, 17.7 percent of the total. However, if we compare with February two years ago, when the pandemic started, the prices of this sector, so important to the economy, are still 45,619 lower. In other words, the hospitality industry experiences the same evolution as the economy in general, its behavior is due solely and exclusively to the recovery of a large part of the activity lost by Covid in the almost two last years. There is no new growth, but worsening employment.

Where, then, do the prices improve? In two areas, mainly, in education and health. Especially in the latter. Last year closed with 1.75 million contributors to the health sector, 149,000 more than before the pandemic. The other area that is growing is public administrations, with 84,300 more assets. The cotton test does not lie. If we add health and administrative, we find that in Spain there are about 233,000 new employees, essentially, in public administrations.

Sánchez shows his chest with the drop in unemployment, as did during his presentation the Secretaries of State for Employment, Joaquín Pérez Rey, and of Social Security and Pensions, Israel Arroyo. And, without a doubt, they are right. But it is a job at the expense of the pocket of all citizens. If we go back to Social Security, we will see that the increase in contributions during the coronavirus period grew by 506,236, that is, almost half (233,000) is public employment.

In addition, Funcas, the study center for the former savings banks, considers that private sector employment is still some 100,000 people below the pre-Covid level, to which should be added 102,500 who still remain in the Ertes, and a slightly higher number of self-employed due to cessation of activity. In total, private employment would be lower by more than 300,000 people. So I don’t know what the government is bragging about.

There is a more serious fact, which we already denounced here last week, 90 percent of new employment is temporary in sectors such as hospitality and tourism, while industrial employment rises very slightly.

The labour reform, which the Second Vice President and Minister of Labor, Yolanda Díaz, presented with great fanfare on the Day of the Holy Innocents does not offer even a solution to the serious problem of temporality, it just tries to cover it up. From now on they will all be called discontinuous fixed. And this is reforming the economy!

Rather it is a botch, which runs the risk of worsening in the parliamentary process, due to nationalist demands that the regional agreements prevail over the sectoral ones.

But here the problems for the new year do not end. The Council of Economists, chaired by Valentí Pich, as well as several experts consulted by this newspaper, warn that inflation is becoming structuralIn other words, a good part of the increases in gas or electricity are being transferred to consumer products, especially the food and hospitality sector, as well as to durable goods such as housing and motor vehicles, so that hikes will last over time.

The proof that this is so is in December inflation. The overall rate reached 6.7 percent, the highest percentage in 40 years. The worst thing is that core inflation, which does not include energy products and raw food, exceeded 2 percent.

If this trend is confirmed beyond the month of April, the date on which all the gurus have set the inflation peak for this year, we have a problem, because the ECB will be forced to accelerate the withdrawal of monetary stimulus and financing will become considerably more expensive and it will put the brakes on activity even more. One of the countries most affected by a hypothetical tightening of monetary policy would be Spain, with a debt of 120 percent of GDP. Y if not ask Zapatero why he had to back down from his policy of unbridled spending when the risk premium went through the roof.

The same feeling, as you have seen, has in the United States, where the Federal Reserve has begun to assess an advance of the rise in interest rates to next March, because prices are runaway and do not look to give way.

Even in the European Union they have begun to take action on the matter to try to put a stop to the so-called green inflation, that is, that produced by the energy transition. The proposed regulation that the Commission will debate in the coming weeks so that gas and nuclear are included in the taxonomy of green or sustainable energies, has fallen like a bomb in countries like Spain, where Vice President Teresa Ribera boasts of championing a planetary movement on the ecological transition, although she is not able to offer a solution for electricity prices.

The nuclear park will double in the next few years. From France to Poland, passing through the vast majority of Eastern countries, in addition to India, China or Japan, they are in favor of extending the status of nuclear, together with gas, as clean transitional energies. Both have a common characteristic along with their low level of contamination, sus reduced energy production costs.

The resistance of some countries, like ours, lies in the fact that the The inclusion of these two energies will allow them to access cheap financing from both the financial and banking markets., as well as European funds for the energy transition, to the detriment of other renewable sources, such as solar, photovoltaic or green hydrogen (a chimera that will still require billions of investment to be competitive). In the Spanish case, almost 40 percent of the 70,000 million of the Next Generation will go to finance the ecological transition.

The only way for Europe to achieve the commitment to Fit for 55, (55 percent of the energies will be renewable in 2030), is to lower the cost of the transition and the impact on the pocket of citizens. A reasonable proposal, which Sánchez should rethink, if he does not want to regret the rise in consumer prices later. Above all, taking into account that neither the recovery nor employment are consolidated.

PD.- One of the relevant news, which went almost unnoticed, was the takeover of Glovo, one of the few Spanish unicorns, by the German Delivery Hero. Glovo explored its IPO, where it would have become part of the selective Ibex 35, with a capitalization of more than 2,000 million. However, he discarded it because his accounts were not yet out. The Spanish startup lost close to 400 million in the last three years, despite its increasing valuation in the market.

But Spanish investors are not used to putting money in losing companies, unlike on Wall Street. Perhaps one of the causes of the absence of large companies in the new economy and also of the lack of entrepreneurial vocation resides in this short-term vision.