The Government contradicts the INE and estimates that hours worked have grown by 7% since 2019, five times more than what the EPA says
Social Security has joined the debate on the hours worked in Spain with a new statistic that contradicts what, until now, the INE data establishes.. The ministry led by José Luis Escrivá is based on the data it manages on social contributions to affirm that the effective hours worked in Spain (discounted by ERTE, sick leave and others) have grown by 7.3% since the fourth quarter of 2019.. On the other hand, the data provided by the INE through the GDP or the Active Population Survey (EPA) show that the hours worked in Spain have increased between 1.2 and 1.4% since the emergence of the coronavirus.
On Tuesday, Social Security published a new statistic with its own calculation of hours worked based on social contributions. The series dates back to 2019, so it is impossible to compare with pre-pandemic data. However, the results obtained until the end of 2021 generally coincide with the GDP and EPA data until that date.. However, starting in 2022, a gap opens between the two series that has widened and has not yet been closed.
This similar trend until 2022 is one of the reasons that Social Security uses to defend that its data is robust. The other argument put forward is that its information coincides with the figures from the Quarterly Labor Cost Survey (ETCL) that is also published by the statistical institute.. In this case, the similarity is logical given that the ETCL obtains its information from Social Security contribution accounts.
The controversy is served and the issue is not trivial. Hours worked are a fundamental variable when estimating GDP. If the measurement made by the INE were not reflecting reality – as the Social Security data seem to suggest – it would be logical to think that real GDP is also higher than what the data indicates.. Some analysts still believe this, who believe that the upward revision undertaken by the INE in September fell short.
However, the issue is complex. Firstly, because the national accounting rules (the system for calculating GDP) that are used in all EU countries make it clear that the reference for measuring hours worked in GDP must be the EPA.. The rule makes it clear that the hours actually worked “are not derived from administrative or legal concepts”, as is the case of the new statistics, which are still an administrative record.. The Social Security data leaves out the self-employed, the rest of the special contribution regimes and workers in the underground economy.. Elements that the EPA, which is still a survey, does consider.
In part, this different composition could explain the divergence between the calculations of the INE and those of Social Security. Another hypothesis is the possibility that a part of the underground economy has emerged during the pandemic.. If this had happened like this, Social Security would be noticing an increase in “legal” hours worked (that is, paid contributions) of people who previously worked illegally, but that the INE was already detecting because it also measures the informal economy.
Social Security's decision to publish its own indicator on a variable that the INE already measures is not the first disagreement that has occurred between the Executive and the statistical office this term.. The INE, which is legally an autonomous body under the umbrella of the Ministry of Economic Affairs, has been questioned on several occasions by different members of the Executive.. Especially the GDP data and the CPI measurement. The pressure forced the resignation of the previous president of the INE, Juan Manuel Rodríguez Poo, who was replaced as head of the organization by Elena Manzaner at the proposal of the Economy.
The mystery of hours worked
Hours worked have become one of the great unknowns of the post-pandemic economic recovery. While the number of workers in Spain is already clearly above that recorded at the end of 2019, the hours worked barely exceed the pre-coronavirus threshold.
Experts have proposed some hypotheses that could explain why this trend has been broken, such as the aforementioned emergence of the underground economy or the increase in hours not worked due to medical leave. It is also possible that the EPA is not really capturing the increase in hours worked that is seen in Social Security records. But there is still no clear consensus on the reasons behind this change in trend.