By Ana Maria Santacreu, Economist
The unemployment rate in Spain in 2014 was 24.5 percent, according to the Organization for Economic Cooperation and Development (OECD).1 With the exception of Greece, it has the highest unemployment rate in the OECD (which had an average unemployment rate of 7.3 percent in the third quarter of 2014). Recently, there has been a lot of debate about what type of labor market reforms can be applied to reduce unemployment.
There are many angles in which one can look at these numbers. One of them is to decompose the unemployment rate by the level of education of the labor force.2 This decomposition can tell us what type of unemployment the country is facing. A common way to divide the population by education is to look at primary, secondary and tertiary education.3
In Spain, over 50 percent of the total number of unemployed have only primary education. Only a little over 20 percent of unemployed people have tertiary education. There are two factors that can explain these numbers:
In the case of Spain, it is the latter. Only 15 percent of those workers with tertiary education were unemployed in Spain in 2013 versus 33 percent of those with primary education. This is more striking when we note that the participation rate of those with primary and tertiary education was similar (around 40 percent in both cases).
Understanding these statistics is important to implement labor market reforms to reduce the high levels of unemployment in the country.
1 The OECD defines those in unemployment as “people aged 15 and over who were without work during the reference week, available for work and actively seeking work during the previous four weeks including the reference week.”
2 The labor force is defined as the number of people aged 15 and over who are either employed or actively looking for a job.
3 Primary, secondary and tertiary education are classified based on the International Standard Classification of Education.