Spanish Businesses expect more staff cuts

 

A report in El Pais today mentioned how 40% of businesses in Spain surveyed cut staff numbers last year, and just 25% added to their employees. The same businesses expect few cuts to be made in the first half of 2011, and from that point onwards just 16% expect to hire new staff. The number of Businesses expecting to cut staffing numbers in 2011 falls to 30%.

This news coincides with unemployment figures released last week by the Labor Ministry, which show 3.2% increase in unemployment from December, currently 4.23 million individuals, the highest level since 1966.

Despite new labor reforms going into effect, there have been less businesses where over 90% of employees had open-ended contracts compared with Q1 of the year: 50% of businesses surveyed, compared with 60% previously. However, the businesses where between 80% and 90% of employees had fixed contracts grew slightly. Meanwhile, the number of companies where more than half of employees were on temporary contracts increased from 3.4% to 5.5%.

25% of those surveyed said they planned to reduce the number of fixed contracts during 2011, while 60% said they had no changes planned to their number of temporary contracts. Official employment figures show that out of 1.11 million registered contracts last January, only 9.2% were open-ended.

As expected, the worst industry was in construction, reporting a 60% reduction in staff numbers, followed by finance, insurance and real estate, where 55% made cuts. However, the services sector saw 40% of businesses hiring new workers.

This figure contradicts the latest unemployment figures, which according to the Labor Ministry rose in all sectors, but especially in the services sector, which represented 80% of all new jobless people.

Finance, insurance and real estate remain the least optimistic when it comes to employment expectations for the first half of 2011, with 53% of businesses expecing to make cuts.

In terms of growth by size of business, most of the firms that made cuts in the second half of 2010 had between 101 and 500 employees, followed by firms with over 5,000 employees, of which 50% made staffing cuts.