Jobless figures fell by 127,248 in June, which is undoubtedly good news for the Spanish labor market. But there are too many signs that this is just the beginning of a recovery. For one thing, no new jobs were actually created. Instead, the numbers indicate that there are fewer unemployed workers, but what is happening is that some older workers have dropped out of the labor force completely and others have ran out of unemployment benefits. Both groups will no longer contribute to official unemployment numbers.
That said, the Strategy for Youth Employment seems fruitful so far and will continue to operate thanks to 1.9 billion euros in EU funding. We could be seeing the end of rampant job cuts, but we'll have to wait on the Survey of the Active Population and fall jobs figures to say for sure.
Social Security figures oblige officials to remain prudent. Only 26,000 people started contributing to the program in June, which is a bit less than this time last year. In the past year, 633,977 fewer workers are contributing to the national pension system. This shows that the labor market continues to weaken while the underground economy grows. And these problems won't fix themselves.
Rajoy and his team should remember that they were elected after making promises to fix these problems. Rajoy shouldn't tell the public that the economy is definitely improving and that an end to job losses marks the beginning of a long-awaited recovery that will only happen if the government completes its reform agenda before the next electoral campaign begins. Rajoy should avoid the temptation to settle for ephemeral successes and stop reforms now, which would upset many parties and not fix the unemployment problem, leaving it for the next administration to deal with.
