FACES OF JOBLESSNESS IN SPAIN: ANATOMY OF EMPLOYMENT BARRIERS. James Browne and Rodrigo Fernández

Transcription

1 FACES OF JOBLESSNESS IN SPAIN: ANATOMY OF EMPLOYMENT BARRIERS James Browne and Rodrigo Fernández

2

3

4

5 TABLE OF CONTENTS 1. INTRODUCTION LABOUR MARKET AND SOCIAL CONTEXT EMPLOYMENT BARRIERS IN SPAIN FACES OF JOBLESSNESS IN SPAIN CONCLUSIONS ANNEX A. LATENT CLASS RESULTS ANNEX B. LATENT CLASS ANALYSIS AND MODEL SELECTION Tables Table 2.1. Risk of poverty or social exclusion, Table 3.1. Employment-barrier indicators Table A.1. Latent class estimates Table A.2. Characterisation of the latent groups Figures Figure 2.1. Employment rates: strong recovery from the crisis Figure 2.2. Population groups with potential labour market difficulties Figure 2.3. Composition of the Spanish population with labour market difficulties Figure 3.1. Employment barrier: conceptual framework Figure 3.2. Number of simultaneous barriers Figure 4.1. Share of individuals facing multiple employment barriers in each group Figure B.1. Selection of the optimal number of latent classes Boxes Box 2.1. Individuals with potential labour market difficulties (target population) Box 4.1. Group 1: Labour-market inactive women with low education and weak financial incentives Box 4.2. Group 2: Unemployed prime age adults with low work experience Box 4.3. Group 3: Experienced but low-skilled unemployed men Box 4.4. Group 4: Well-educated prime age adults with weak labour market attachment Box 4.5. Group 5: Early retirees with weak financial incentives Box 4.6. Group 6: Unemployed women with low work experience Box 4.7. Group 7: Low-skilled women in unstable jobs Box 4.8. Group 8: Labour-market inactive mothers with low work experience Box 4.9. Group 9: Low-skilled individuals with health problems and high levels of earnings-replacement benefits Box Group 10: Educated parents in short-term unemployment or working part time Box Group 11: Unemployed youth without any past work experience facing scarce job opportunities Box Group 12: Unemployed mothers actively looking for work but facing scarce job opportunities Box Group 13: Short-term unemployed men with high earnings-replacement benefits facing scarce job opportunities Policy Analysis Note (PAN) for Spain OECD

6 ACKNOWLEDGEMENTS This document was produced with the financial assistance of the European Union Programme for Employment and Social Innovation EaSI ( , EC-OECD grant agreement VS/2016/0005, DI150038). It is part of a joint project between EC and OECD (VS/2016/0005 (DI150038), Cooperation with the OECD on Assessing Activating and Enabling Benefits and Services in the EU) covering six countries: Estonia, Ireland, Italy, Lithuania, Portugal and Spain. The report incorporates feedback received during the project kick-off seminar, held at OECD in Paris on 3 March 2016 with the participation of the EC and representatives from all participating countries. Lead authors gratefully acknowledge contributions from colleagues at the OECD (Herwig Immervoll, Daniele Pacifico, Céline Thévenot), as well as comments from colleagues at the World Bank (Aylin Isik-Dikmelik, Sandor Karacsony, Natalia Millan, Mirey Ovadiya, Frieda Vandeninden, Michele Davide Zini), who are undertaking a parallel and closely related joint project with the EC covering six further EU Member States. All views and any errors in this report are the responsibility of the authors. In particular, the report should not be reported as representing the official views of the OECD, of the European Union, or of their member countries. This project is co-funded by the European Union Policy Analysis Note (PAN) for Spain OECD

7 FACES OF JOBLESSNESS IN SPAIN ANATOMY OF EMPLOYMENT BARRIERS 1. INTRODUCTION This Policy Analysis Note (PAN) for Spain assesses the characteristics and employment barriers of working-age individuals with no or weak labour-market attachment. It is one of six such country notes in a joint EC-OECD project covering Estonia, Ireland, Italy, Lithuania, Portugal and Spain. The objective of this project is to provide a novel perspective on employment difficulties, and to aid in the identification of policy approaches to overcome them. The project website at provides further information. Each PAN develops profiles of key employment barriers and quantifies their incidence and intensity among jobless individuals and among those who work or earn very little or intermittently. The underlying conceptual framework and statistical approach is described in an associated methodological background paper (Fernandez et al., 2016; Immervoll and Isik-Dikmelik, 2016) and is consistent with that employed in a related EC-World Bank activity covering six further EU countries. The empirical results from each PAN will be used to inform a dialogue on policy approaches and options that could address the most prevalent employment barriers in selected population groups and strengthen their labour-market attachment. This dialogue will take place in a second part of the EC-OECD project. Its results and an associated policy inventory will be presented in a series of six Country Policy Papers (CPP). A key motivation behind this project is the finding from the literature on activation and employmentsupport policies (AESPs), and on social protection systems more generally, that careful targeting and tailoring to individual circumstances are crucial factors for policy success. 1 However, policy discussions do not necessarily reflect this. They often refer to broader labour-market groups such as young people, older workers, people with disabilities or lone parents. Similarities of employment barriers among members of such broader groups are implicitly assumed but not well documented (for instance, being young is not an employment barrier). As a result, policy interventions targeted on the basis of characteristics such as age, health status or family situation alone may be ill-adapted to the needs of jobless individuals and those with precarious employment patterns. An in-depth inventory of people s employment barriers, and an identification of groups who share similar combinations of labour-market obstacles, can contribute to a better match between individual needs and available support, and make associated policy interventions more effective and less costly. Countries frequently seek to account for individual circumstances and labour-market difficulties by means of powerful statistical tools that profile individual benefit claimants using administrative data. Such tools are useful for tailoring the employment programmes that each registered individual is offered. They often rely on administrative data, which have distinct advantages, but tend to cover only a subset of the out-of-work population, such as the registered unemployed. As a result, the profiling tools built around these data typically cannot be used to provide a broader perspective on the employment barriers facing the entire population of those with no or weak labour market attachment. This note complements existing profiling instruments by adopting more of a birds-eye approach that considers the employment barriers of all those with no or weak labour market attachment. This sizeable and heterogeneous group constitutes 1. See for example OECD (2013a, 2013b, 2014a, 2015a); Immervoll and Scarpetta (2012); Arias et al. (2014); World Bank (2013); European Commission (EC) (2015); Eurofound (2012). Policy Analysis Note (PAN) for Spain OECD

8 the potential client group for AESPs. Understanding their employment barriers is not only important for linking up services provided by different institutions, but it is also essential for identifying groups who would benefit from employment-related programmes or incentives, and who are not currently clients of any of the institutions providing such measures. A comprehensive assessment of potential employment barriers requires detailed information on people s skills, work history, health status, household circumstances and incomes. The European Union Survey on Income and Living Conditions (EU-SILC) contains rich information for identifying and assessing potential barriers to employment and is the primary source of data for this note. EU-SILC offers cross-country comparability, an extended reference period 2 over which one can assess the respondents main activity status, and detailed information on individual and family circumstances including people s work-related skills end education, work history, health status, income sources, tax liabilities and benefit amounts. However, there is a relatively long time-lag between data collection and availability (EU-SILC 2014 was made available in February 2016). EU-SILC also contains less detailed information on labourforce status than standard labour-force surveys. In the Spanish SILC data for 2014, 45% of the working-age population 3 can be considered to face potential labour-market difficulties. The remainder of this note refers to this group as the target population. 4 Of this 45%, 30% did not work at all throughout the reference period and a further 15% had weak labour market attachment with either unstable jobs, limited working hours or zero or near-zero earnings. Potential employment barriers that are particularly common among the target population include no recent work activity (67% of the target population), low education or professional skills (52%), scarce job opportunities (46%) and limited total past work experience (44%). Other potential barriers, such as health limitations, care responsibilities, high levels of earnings-replacement benefits and high levels of non-labour income are frequent among some sub-groups, but less prevalent overall. The results of the statistical clustering analysis suggest that the target population can be separated into 13 distinct groups with similar employment-barrier profiles within each group. Focusing on the prevailing characteristics in each group, the emerging clusters may be summarised as follows: 1. Labour-market inactive women with low education and weak financial incentives (14% of those with no or weak labour market attachment) 2. Unemployed prime-age adults with low work experience (13%) 3. Experienced but low-skilled unemployed men (11%) 4. Well-educated prime-age adults with weak labour market attachment (9%) 5. Early retirees with weak financial incentives (9%) 6. Unemployed women with low work experience (7%) 7. Low-skilled women in unstable jobs (6%) 8. Labour-market inactive mothers with low work experience (6%) 2. EU-SILCdata provide information on individuals labour-market status at different points in time during the reference year (each of the twelve months) and at the time of the interview. This note uses all 13 data points to characterise people s employment status. 3. Ages 18 to 64, excluding individuals in full-time education or in compulsory military service. 4. This figure is expected to be higher than the average proportion of working-age people in Spain who were not in paid work during 2013 (the reference year for the 2014 SILC) according to EU Labour Force Survey statistics, which was 41%. The difference can be explained by the high share of people with a weak labour market attachment in Spain. These people were in work only a small proportion of the year (and then, on average, considered as unemployed or inactive by Labour Force Surveys). So the figures are not necessarily inconsistent. Policy Analysis Note (PAN) for Spain OECD

9 9. Low-skilled individuals with health problems and high levels of earnings-replacement benefits (5%) 10. Educated parents in short-term unemployment or working part time (5%) 11. Unemployed youth without any past work experience facing scarce job opportunities (5%) 12. Unemployed mothers actively looking for work but facing scarce job opportunities (4%) 13. Short-term unemployed men with high earnings-replacement benefits facing scarce job opportunities (4%) These group labels indicate that proxy groupings, which are commonly referred to in the policy debate, such as women, disabled, youth, include distinct sub-groups with very different employment-barrier profiles. For instance, the following combinations of employment barriers are common for women with children: low work experience combined with care responsibilities (Group 8), care responsibilities and a lack of job opportunities (Group 10) and care responsibilities, scarce job opportunities and low education or skills (Group 12). Employment barriers are also highly heterogeneous for youth (Groups 4 and 11), workers with intermittent employment patterns (Groups 4, 7 and 10) or older individuals (Groups 1 and 6). As shown in Section 4, these groups also differ markedly with respect to their poverty risks, material deprivation levels and other family or individual circumstances. Most individuals in the target population face more than one potential employment barrier simultaneously. Four in five face at least two such barriers, and about one in four show three or more. For instance, a vast majority of the Unemployed youth without any past work experience facing scarce job opportunities (Group 11) combine scarce job opportunities, low education or skills with a complete lack of previous work experience. Similarly, many Labour-market inactive mothers with low work experience (Group 8) lack work experience and also have care responsibilities that may limit their availability for paid work. For the majority of the target population, therefore, addressing one type of employment obstacle may not be enough to boost employment levels. From a policy perspective, these results point to a need to carefully combine or sequence different activation and employment support measures, and to co-ordinate them across policy domains and institutions. The rest of this note proceeds as follows. Section 2 provides some background information on the evolution of social and labour market conditions in Spain and how this compares with other EU countries. Section 3 uses the most recent EU-SILC data to provide quantitative indicators of the intensity and incidence of different types of employment barriers. Section 4 applies a statistical clustering technique to organise the population of individuals with no or weak labour-market attachment into groups with homogeneous combinations of employment barriers. It also presents key demographic and socio-economic characteristics that are relevant for deciding policy priorities and approaches for each group. A short concluding section highlights selected possible directions for extending the approach further. Policy Analysis Note (PAN) for Spain OECD

10 2. LABOUR MARKET AND SOCIAL CONTEXT Trends in employment, unemployment and labour-market inactivity In Spain as well as in the five other countries covered by this project, the economic crisis has significantly impacted labour markets, in turn causing increased poverty and material deprivation. The impact of the crisis in Spain was especially long lasting, with employment rates continuously declining for six consecutive years after the start of the crisis and a recovery starting only in 2013/14. Figure 2.1 shows employment-to-population ratios between 2007 and 2015 and compares these with the EU average. During the crisis, the employment rate in Spain fell by 11 ppts, from 70% in 2007 to less than 59% in This is the largest peak to trough fall among the six countries analysed. Since 2014 employment rates have recovered. However, by 2015, the rate in Spain was only slightly above that of Italy and remained well below the four other countries included in this project, and also well below the EU average. Despite its size, the fall in employment rates provides only a partial picture of the extent of labourmarket slack during and after the recession: A decline of the working-age population by around one million over this period was driven by historically low fertility rates and substantial drop in net immigration: migrant inflows fell from 15.7 per thousand inhabitants in 2005 to 6.7 in 2013, while outflows increased from 1.1 to 8.3 per thousand. In 2013, the outflow of foreign nationals exceeded inflows by 211,000. There was also a net outflow of 41,000 Spanish nationals. Among those Spanish nationals emigrating, about three quarters were of working-age (OECD, 2015d). The share of involuntary part-time work rose from 3.9% of employees in 2007 to 10% in 2015, indicating a substantial degree of underemployment Figure 2.1. Employment rates: strong recovery from the crisis In % of working-age population Estonia Ireland Italy Portugal Spain Lithuania European Union Note: The EU average is weighted. Source: Eurostat Labour Force Statistics. Policy Analysis Note (PAN) for Spain OECD

11 Trends in employment rates were mirrored by substantial movements in unemployment, which peaked at 26.1% in It has since fallen to 20.4% (Q1 2016) but remains much higher than the EU average (8.8%). Economic activity rates have increased slightly during this period as a result of higher female labour force participation. Much of the adjustment from lower labour demand in Spain during the crisis took the form of lower employment rather than lower wages. Inflexible sectoral collective bargaining arrangements with automatic wage indexation meant that even before the crisis the most common response for firms facing an adverse demand shock was to reduce employment (OECD, 2014b). A recent reform in 2012 has sought to address this by increasing firm-level flexibility in sector-wide collective bargaining agreements and increasing the possibilities for firms to opt out of sector-wide agreements even without the consent of social partners. Recent estimates indicate a sharp increase in structural unemployment since 2007 (European Commission, 2016). Possible key reasons for this structural change, suggested by a shift of the Beveridge curve since 2008 (European Commission, 2016, Graph ) include the following: A greater mismatch between current labour supply and labour demand in terms of skills. In 2014, about one third of those in employment were low-skilled against 42% before the crisis, which suggests a shift of labour demand towards higher skills requirements and a continuing significant need for upskilling. In 2014, the share of years old individuals with low educational attainment (ISCED 0-2) was 39%, (compared to an EU average of 21%) According to PIAAC survey data, Spain has comparatively few top performers in any of the measured assessment areas. In mathematics 8% performed at level 5 and 6 (the highest levels), considerably below the OECD average of 12.6% (OECD, 2013c). Despite the variety of options available to adult learners, adults with low levels of skill remain less likely to participate in jobrelated education or training than their counterparts in other countries. Only 19% of low-skilled adults in Spain participated in some form of formal or non-formal adult education or training in Spain in 2012, compared to the OECD average of 31% (OECD, 2015e). Labour-market segmentation hindering an efficient job re-allocation process. The Spanish labour market is characterised by a high level of duality between those on permanent contracts who benefit from very strong employment protection legislation and those on temporary contracts. The effect of these protections is that it is much more expensive for firms to make individuals on permanent contracts redundant than those on temporary contracts and therefore many of those on temporary contracts were made redundant during the recession: the proportion of workers on temporary contracts fell between 2007 and 2012 despite around nine in every ten new contracts during this period being fixed term. Recent reforms have sought to bring the costs of terminating fixed-term and permanent contracts closer in to line, and appear to have been successful in increasing the number of new hires on permanent contracts (OECD, 2014b, 2016b). However, an OECD report examining the impact of these reforms suggested that more could be done in this area. For example, the report recommended reducing severance costs for large employers to levels closer to the EU average (OECD, 2014b). Difficult-to-access re-employment and job-search support. Investments in Active Labour Market Policies (ALMPs) in Spain remain limited. The participation rates in ALMPs among active jobseekers was the 7 th lowest in the EU in 2013 at 7.2%, and despite the marked increase in unemployment, spending was below the EU average. Moreover, spending does not appear to be well targeted. Spending on vocational training activities accounted for only about 22% of the ALMP budget in 2015, whereas more than half was spent on employment incentives, subsidised employment measures and rehabilitation. Around 20% of the ALMP budget was spent in 2015 on measures of direct job creation (public works), which have been shown to be relatively ineffective at improving employability, including in Spain (Card et al., 2010; ESTEP, 2014). A recent OECD study recommended reducing reliance on employment subsidies and public works programmes and increasing training opportunities for the long-term unemployed. It also argued Policy Analysis Note (PAN) for Spain OECD

12 for tighter targeting of employment subsidies and direct employment creation measures on those furthest from the labour market (OECD, 2015b). Youth unemployment has historically been high in Spain, and has strongly increased since 2007, reaching a peak of 55.4% in In 2014 and 2015, the rate started falling but at 46% (Q1 2016), it still more than twice the rate at the beginning of the crisis (18% on average in 2007), and the second-highest in the EU after Greece. Very high unemployment rates among youth in Spain are mainly the result of scarce job opportunities. Similarly, the number of young people aged not in employment, education or training (NEET) has increased between 2007 (12%) and 2015 (16%) and is now significantly above the EU average. Moreover, more than a third of those who are NEET do not live with anyone in paid work and are hence at risk of poverty, and half have low skills (OECD, 2016b). The Spanish government has introduced the National Youth Guarantee scheme which gives those enrolled an offer of employment or training, but this has not yet delivered the expected results (European Commission, 2016). One million youth are expected to benefit from this programme, however, up to February 2015, only youth were registered and of those only about found a job. Unemployment in Spain also shows a distinct geographical pattern with much higher rates in the South (30% in 2015) and relatively low rates in the North-East (15%). 5 As unemployment has remained very high for an extended period of time, rates of long-term have also increased, peaking in 2013 at 13% of the economically active population. It has fallen to 11% in 2015, but remains at more than twice the EU average. Very-long-term unemployment (more than two years) only started to fall later, and has fallen more slowly. The very-long term unemployment rate was 7.6% in 2015, close to three times the EU average. Income support for the unemployed in Spain mainly consists of a general national contributory scheme and a non-contributory benefit for those who are not eligible for the contributory one. (There are also some minor unemployment benefit schemes for specific categories of worker). Entitlement to unemployment benefits was tightened, especially for the long-term unemployed, as part of the structural labour-market reforms introduced in As a result of persistent long-term unemployment, a large share of jobseekers are no longer entitled to unemployment benefits. In 2007, about 77% of the unemployed in Spain received income support (either contributory or non-contributory), but by 2014 only 37% were covered. 6 In addition, minimum-income support schemes remain relatively fragmented and poorly co-ordinated across geographic areas, institutions and levels of government. They are administrated at local level, with large regional disparities and low coverage (European Commission 2016). Partly as a result, poverty risks for those who lose their jobs are high. A lack of accessible income support also encourages the unemployed to take precarious jobs or jobs for which they are overqualified rather than waiting to find a job that matches their abilities and qualifications. Incidence of economic hardship The combination of high levels of unemployment and high rates of poverty among the unemployed produces a very significant challenge in Spain. 23% of working-age individuals are at-risk of poverty, the highest rate among the six countries studied in this project, and well above the EU average (17%). Poverty rates are high among those in work too, and particularly among households with children. As well as having low employment rates at the individual level, Spain also has a high proportion of working-age adults living in households with very low work intensity: many of those who are not in employment live in workless households. Although rates of severe material deprivation are relatively low in Spain (below the EU average), the proportion of working-age adults at risk of poverty or social exclusion (AROPE) is, 5. Source: Eurostat Labour Force Survey, regional statistics. 6. Source: OECD Benefit Recipients database SOCR ( Policy Analysis Note (PAN) for Spain OECD

13 again, the highest of the six countries studied (see Table 2.1 below). Spain is also one of the most unequal countries in the EU with the fourth-highest Gini coefficient for disposable income (34.7 in 2014), following a very sharp increase since Table 2.1. Risk of poverty or social exclusion, 2014, In % of people aged Individuals aged Individuals aged Source: Eurostat (EU-SILC 2014). Target groups for activation and employment-support policies Spain Estonia Ireland Italy Lithuania Portugal EU28 People at risk of poverty or social exclusion People at risk of poverty All Not working Working full-time part-time Households without children Households with children People living in households with severe material deprivation (1) All Households without children Households with children People living in households with very low work intensity (2) Individuals with labour market difficulties frequently move between non-employment and different states of precarious employment. As a result, limiting attention to snapshots of non-employed (or underemployed) individuals at a specific point in time, such as those based on labour force surveys, may not capture the true extent of labour-market difficulties or the need for policy intervention. To cover the potential scope of AESPs, the target population of the analysis in this note therefore includes workingage individuals who are persistently out of work (either unemployed or labour-market inactive for more than 12 consecutive months) as well as individuals whose labour-market attachment is weak. 7 Weak labour-market attachment can include individuals with unstable jobs working only sporadically, those on restricted working hours, and those with very low earnings (due to, for example, working informally or in very low productivity self-employment). Box 2.1 defines the sub-groups of this population and explains how they are identified using the EU-SILC data. The target population is a sub-set of the reference population of working-age adults relevant for AESPs. The reference population, in turn, is defined as all working-age adults except for full-time students and those in compulsory military service as these groups are typically outside the scope of AESPs. For simplicity, the rest of this note also refers to this reference group as the working-age population. 7. This note does not attempt to distinguish between voluntary and involuntary joblessness or reduced work intensity. Individuals can of course choose to be out of work, or in part-time or part-year employment, voluntarily, and some surveys ask respondents whether they want to work. However, those saying they do not want employment, or prefer to work part-time or part-year, may do so as a result of employment barriers they face, such as care obligations or weak financial incentives, which policy might potentially address. If extended voluntary labour-market inactivity or underemployment creates or exacerbate certain types of employment barriers, it may subsequently give rise to involuntary labour-market detachment or partial employment in later periods. Policy Analysis Note (PAN) for Spain OECD

14 Clearly, not everybody experiencing potential labour market difficulties may be an intended target for AESPs. 8 The broad definition of labour market difficulties adopted in this note is not intended to be prescriptive about the appropriate scope of AESPs; instead, it seeks to inform policy decisions by documenting the employment barriers and circumstances of individuals with no or weak labour market attachment. The approach is thus descriptive and takes no position on whether policy intervention is justified for specific groups. The resulting profiles of employment barriers are intended to facilitate discussions of the strengths and limitations of different policy interventions for concrete groups of individuals. They can also be used to help inform decisions on whether to channel additional policy efforts towards specific priority groups. Box 2.1. Individuals with potential labour market difficulties (target population) The target population in this note includes those who are persistently out-of-work, as well as those with weak labour-market attachment. The persistently out-of-work population (long-term unemployed or inactive) includes individuals reporting no employment activity throughout the reference period. The reference period corresponds to 12 consecutive monthly observations in the income reference year (January-December of year T-1) plus one additional observation at the moment of the interview (in year T). The group with weak labour market attachment refers to individuals reporting employment activity during the reference period matching any of the following three situations: i) Unstable jobs: individuals working only a limited number of months throughout the reference period. The threshold is equivalent to Eurostat s low-work-intensity measure: Above zero but no more than 45% of potential working time in the income reference year. To reconcile information reported for the income reference period and at the moment of the interview the following individuals are also considered in this group: 1) Workers who report no work activity during the income reference period but who are working at the moment of the interview and, 2) workers with between 45% and 50% of work activity during the income reference period who do not report any work activity in either the last month of the income reference period or at the moment of the interview. ii) iii) Restricted hours: workers who spent most or all of the reference period working 20 hours or less a week. Error! Reference source not found. However, individuals working 20 hours or less who are not likely to have dditional work capacity, e.g. due to ongoing education or training, are excluded. Near-zero earnings: individuals reporting some work activity during the income reference period but negative, zero or near-zero monthly earnings. 2 In addition to possible classification error, situations included in this group could signal potential labour market difficulties, such as underpayment and/or informal activities. 1. The 20-hours threshold is approximately in-line with the 45% part-year threshold that identifies the group with unstable jobs. For a 40-hours working week in a full-time job, 45% of full-time would correspond to 18 hours a week. However, in SILC, the distribution of working hours in the main job shows a high degree of bunching at 10, 15, 20 and 25 hours a week. As the closest multiple of 5, a value of 20 hours was therefore chosen. 2. The near-zero earnings threshold is set in Spain at EUR 111/month. This value corresponds broadly to the 1 st percentile of the SILC earnings distribution. Figure 2.2 shows the evolution of the target population in Spain between SILC survey years 2008 and 2014 (since the reference period is the year prior to the interview, these data refer to the period 2007 to 2013). Despite the major definitional differences, the resulting patterns are consistent with the trends based on LFS data shown earlier in Figure 1. As was shown previously, the recovery from the crisis has been particularly slow in Spain: labour market indicators started to improve only in Since the last 8. It is worth noting that, with a definition of working-age as 18-64, some individuals whom policy makers may wish to include in the scope of AESPs are not included in the target group in this note. Although the age cut-offs are common in comparative empirical work, they are becoming less suitable as populations age, especially in countries that are actively seeking to increase retirement ages beyond 65. Policy Analysis Note (PAN) for Spain OECD

15 available SILC year is 2014 (which mostly reflects individuals labour status in 2013), this mild recovery is not yet reflected in the results. Consequently, Figure 2.2 shows an uninterrupted rise in the number of unemployed, inactive and workers weakly linked to the labour market between 2007 and 2013 (SILC years 2008 and 2014). In view of the timing of Spain s labour-market recovery, it is important to keep in mind that the cut-off for all SILC-results in this note is Figure 2.3 shows the size and composition of the target population in SILC At 45%, the group with potential labour-market difficulties is larger in Spain than in the other countries considered in this project with the exception of Ireland. Two thirds of the target population were out of work throughout the reference period, the most common status was unemployment (36% of the target population). 17% reported that they were engaged in domestic tasks and 7% that they were unfit to work. The majority of individuals with weak labour market attachment (underemployment) spent part of the year out of the labour force (unstable jobs), although there are also sizeable groups of individuals who worked part-time throughout the year (8% of the target population) or who report working throughout the year but have very little earnings (5% of the target population). Figure 2.2. Population groups with potential labour market difficulties In % of reference population Persistently out of work % of the reference population 50 Inactive Unemployed Underemployed Source: Calculations based on EU-SILC See Box 2.1 for the definitions of the three groups. Policy Analysis Note (PAN) for Spain OECD

16 Figure 2.3. Composition of the Spanish population with labour market difficulties Persistently out of work (67% of the target population) Working age population (100%) average of six countries 12% ESP 27% 30% 15% "Target" population (45%) Other inactive (2%) Domestic tasks (17%) Unfit to work (7%) Retired (6%) Unemployed (36%) 61% 55% Weak labour market attachment (33% of target population) Persistently out of work Weak labour market attachment No major difficulties Restricted hours (8%) Unstable jobs (25%) Near-zero earnings (5%) Note: The six-country average is unweighted. Source: Calculations based on EU-SILC See Box 2.1 for the definitions of the three groups. Policy Analysis Note (PAN) for Spain OECD

17 3. EMPLOYMENT BARRIERS IN SPAIN Working-age individuals with no or weak labour-market attachment may face a number of employment barriers that prevent them from fully engaging in employment activities. A thorough understanding of these barriers is a pre-requisite for designing and implementing policy interventions in a way that is well-targeted and suitably adapted to the circumstances of different policy clients. Following Immervoll and Scarpetta (2012), this note examines three types of employment barrier, namely (see Figure 3.1): Insufficient work-related capabilities, e.g. a lack of skills, work experience, care responsibilities and health-related limitations; Lack of financial work incentive to look for a good job, e.g., because of low potential pay, relatively generous out-of-work benefits, or access to high levels of income independent of their own work effort (such as capital income or earnings of other family members); Scarce job opportunities, e.g., a shortage of vacancies in the relevant labour-market segment due to shocks or cyclical factors, or because of skills mismatch, discrimination, dual labour markets or other frictions in the labour market. Figure 3.1. Employment barriers: conceptual framework Better-quality employment Policy interventions Employment barrier lack of work-related capabilities Employment barrier lack of financial incentives Employment barrier lack of job opportunities Individuals with potential labour market difficulties Jobless Unstable jobs Restricted working hours Source: Fernandez et al. (2016). The employment barriers outlined above cannot all be measured directly. To operationalise the concepts, this note implements a set of workable indicators in each of the three main categories. Fernandez et al. (2016) provides a fuller discussion of the indicators and their rationale, including descriptive statistics for selected countries. The indicators used for Spain are as follows: Policy Analysis Note (PAN) for Spain OECD

18 Capability, item 1. Low skills: if an individual has low professional skills (their most recent job was in the lowest two categories of the ISCO-08 classification system). 9 Those who demonstrate high skills by having a tertiary degree are assumed not to face this employment barrier even if their most recent job was low-skilled. If an individual has no work experience at all, they are also included in the low skills group. Capability, item 2. Two measures of work experience: No recent work experience: if an individual did no paid work during the reference period (i.e. they were without employment for at least 12 months). Low relative total work experience: the indicator takes one of three values: 1 for those who have no past work experience at all, 2 for those who have some work experience but have worked less than 60% of the time since they left full-time education, and 3 otherwise (i.e., if their total work experience is not low ). Capability, item 3. Health limitations: if an individual reports some or severe long-standing physical or mental limitations in daily activities. Capability, item 4. Care responsibilities: if an individual has a (minor or adult) family member who requires care 10 and is either the only potential care giver in the household, or the only person in the household who is economically inactive or working part-time because of care responsibilities. Incentives, item 1. High non-labour income: if household income other than that relating to the work efforts of the individual in question, 11, is more than 1.4 times the median value in the working-age population (EUR /year, adjusted for household size). Incentives, item 2. High earnings-replacement benefits: if an individual s earningsreplacement benefits received during the reference year exceed 60% of their estimated potential earnings in work. 12 Opportunity (one item only). Scarce job opportunities: if an individual has a high risk of not finding a job despite active job-search during at least seven months, and willingness to take up employment (as stated at the moment of the SILC interview). The risk is estimated in a regression including region, age group, gender, level of professional skills and education as independent variables and being long term unemployed or involuntarily working part time as the dependent variable (see Fernandez et al., 2016 for more details). Individuals with an estimated risk of more than 1.6 times the median value in the working-age population are considered to face scarce job opportunities. Scarce job opportunities not only present a barrier to employment in the short term, but if jobseekers become discouraged and stop active job search, it could lead to further problems in the longer run. 9. This indicator is different from that in Fernandez et al. (2016), which classifies individuals who have achieved less than upper secondary education as facing an employment barrier. Given the extent of skills mismatches in the Spanish labour market discussed in Section 2, it was felt that low levels of professional skills were more likely to present a barrier to employment than low education. 10. Family members assumed to require care are children under the age of 12 receiving less than 30 hours of non-parental childcare a week and adults reporting severe limitations in daily activities due to their health and being economically inactive throughout the reference period (and in the case of those of working age, that permanent disability is the reason for their inactivity). 11. This includes earnings, individual-level earnings replacement benefits, and the individual s share of household-level earnings replacement benefits. 12. Potential earnings are estimated in SILC with a regression model corrected for sample selection. See Fernandez et al. (2016) for details. Policy Analysis Note (PAN) for Spain OECD

19 Table 3.1 shows the shares of individuals in the target and the broader reference populations facing each employment barrier. As expected, the incidence of each barrier is significantly higher in the target population. In most cases, barriers are also more prevalent among those who were out of work throughout the entire reference period than for those with weak labour-market attachment. Common barriers in Spain include low skills, scarce job opportunities and low relative total work experience. These barriers are each faced by nearly half of the target population. The patterns are broadly consistent with the Spanish labourmarket context discussed in Section 2 (high unemployment and long-term unemployment are high, scarce job opportunities and barriers to job reallocation, and low skills among a significant part of the population). A special case is the no recent work experience barrier, which not only acts as a potential employment obstacle but also is a direct result of the way the target population is defined: by definition, those who were persistently out of work did not work at all during the reference period. As a result, 100% of this group are shown as facing no recent work activity as a potential barrier. The other employment barriers, in particular care responsibilities and health limitations, are somewhat less prevalent overall, but may still be very important for some sub-groups. For instance, 12% of the target population receive high levels of earnings replacement benefits, and a similar percentage has no work experience at all. By construction, the underemployed and the persistently out of work have different levels of the work experience barriers. But for most other barriers, the incidence is not very different between the outof-work and the underemployed groups. This suggests that both sub-groups face quite similar employment difficulties that AESPs could address. The one exception is health limitations, which are more common among the out-of-work group, perhaps because health limitations are in many cases severe enough that individuals are unable to undertake any paid work, or because benefit entitlement conditions do not encourage employment for this group. In practice people s individual and family circumstances are complex and often lead to situations where they face multiple barriers to employment. Figure 3.2 shows the number of (simultaneous) barriers faced by individuals in the target population. Only 17% of the target population face only a single barrier to employment. One third face two simultaneous barriers, another third face three, and 13% face at least four. Only 4% face no major employment barrier. For this group, the employment-barrier indicator may be slightly below the respective thresholds used in this note, or they are not working or underemployed for reasons unrelated to the barriers discussed here. They may face other barriers, or they may simply have a strong preference for leisure. The next section uses a statistical clustering technique to examine which combinations of barriers are most common. Table 3.1. Employment-barrier indicators % of population facing different types of barrier Note: See text for definitions and thresholds. Source: Calculations based on EU-SILC All Persistently out of work Weak labour market attachment Insufficient work-related capabilities "low" education or professional skills No professional skills (no past work experience) Positive but low relative work experience No recent work activity "Some" but "low" recent work activity Health limitations Care responsabilities Lack of financial work incentives "High" non-labour income "High" earnings replacements Scarce job opportunities Working age population "Target" population Scarce job opportunities Policy Analysis Note (PAN) for Spain OECD

20 Figure 3.2. Number of simultaneous barriers Spain % of target population average of six countries or more barriers 3 barriers 2 barriers single barrier No major barrier Note: The six-country average is unweighted. Source: Calculations based on EU-SILC Policy Analysis Note (PAN) for Spain OECD

21 4. FACES OF JOBLESSNESS IN SPAIN This section applies the method described in Fernandez et al. (2016) to segment the target population into groups of individuals with similar combinations of employment barriers. Using the 2014 SILC data for Spain, the segmentation process leads to the identification of 13 groups of individuals with no or weak labour market attachment (the target population ). 13 The following paragraphs describe each group in detail. At the end of each paragraph a box reports a Venn diagram showing extent and degree of overlap of the main barriers characterising the group, as well as a list of selected individual and household characteristics with a high probability of occurring in the group. Together, this information can help attach suitable labels ( faces ) to group members, although the labels are necessarily arbitrary to some extent and cannot substitute for careful examination of the comprehensive list of employment barriers and socio-economic characteristics, as reported in Annex Tables A.1 and A.2. Group 1 (14% of the target population): Labour-market inactive women with low education and weak financial incentives. This group consists of older (average age 56) women (100%) who were economically inactive throughout the reference period (80%). 66% of them have worked before (on average for 14 years) but for 59% of them this work experience is low relative to their potential. Another common employment barrier characterising this group is low skills (72%). The group has the lowest average level of education of all the groups (8.6 years) which is also often associated with low professional skills: almost all of this group s previous employment was at the skill level of clerks and sales people or lower. Individuals in this group often live in households with one or more working adult (56%) and thus can draw from significant income that does not depend on their own work effort (52%). On average, the group face 2.7 simultaneous employment barriers, with the most common being low skills, low work experience and weak work incentives resulting from high non-labour incomes in the household. Box 4.1. Group 1: Labour-market inactive women with low education and weak financial incentives Main employment barriers (1) Selected characteristics (2) % of the target pop years old (average) - Women - Inactive - 14 years of paid work experience years of schooling (average) - Average equivalent disposable income: EUR (most likely to be in third and fourth income quintiles) simultaneous employment barriers 1. Surface areas of shapes in the diagram are proportional to the number of group members facing the related barrier ( Proportional Venn Diagrams ). The outer square represents the group size (100%). The diagram shows the three most prevalent barriers in the group and is based on the indicators discussed in Section 3. An exception is the recent work experience indicator. Although this indicator is included in the numerical results in Annex Table A.1, it is not shown in the diagrams as its high prevalence (due to the strong two way causal link with the other barriers) would dominate all other barriers in the graphical representation in all but two groups. 2).Characteristics that distinguish this group from other groups, i.e., categories that have a high probability of occurring in the group. Table A.2 reports individual and household characteristics in more detail. 3. Income quintiles are calculated for the entire national population. Source: Calculations based on EU-SILC 2014, see Annex Tables A.1 and A.2 for full results. 13. Annex A outlines the segmentation method and the process that lead to the identification of the 13 groups. Fernandez et al. (2016) describes in detail the econometric model and the related methodological framework. Policy Analysis Note (PAN) for Spain OECD

22 Group 2 (13% of the target population): Unemployed prime age adults with low work experience. This group is made up of prime age (average age 35) unemployed individuals. 99% were unemployed during the reference period, and 83% were still unemployed at the time of interview. The majority are actively looking for work (80% were actively seeking a job at the time of the interview) but they struggled to find work due to a scarcity of job opportunities. Although everyone in this group has some past employment record, for 79% of them this is low relative to their age and education. Another common obstacle to finding work is their level of skills, which are low for 59% of the group: most do not have an upper secondary education and almost all previously worked in jobs at the skill level of clerks and sales people or lower. Most individuals in this group face at least two of these three employment barriers (the group average is 2.7 simultaneous barriers, as in Group 1). Box 4.2. Group 2: Unemployed prime age adults with low work experience Main employment barriers Education/Skills (59%) Opportunities (100%) Low work experience (79%) Selected characteristics - 35 years old (average) - Unemployed (average spell 11.8 months) - 9 years of paid work experience years of schooling (average) - At risk of poverty - Average equivalent disposable income: EUR (mostly in the bottom income quintile) simultaneous employment barriers % of the target pop. Group 3 (11% of the target population): Experienced but low-skilled unemployed men. The majority of this group are prime age (47 years on average) men (76%) with significant past work experience (25 years on average), who were unemployed for the majority of the reference period (94%). At the time of the interview 86% remained unemployed despite in most cases (82%) actively seeking work. The most common barrier to employment this group faces therefore is scarce job opportunities (90%). The only other common barrier for individuals in this group is low skills which is an obstacle for 61% of the group. 69% received unemployment benefits (EUR 5 300/year, on average), but nevertheless individuals in this group have the lowest average equivalent disposable income (EUR 8 630/year) and 55% are at risk of poverty. The characteristics of this group are similar to those of Group 2, the main differences being that this group is older and has greater work experience. Box 4.3. Group 3: Experienced but low-skilled unemployed men Main employment barriers Education/Skills (61%) Opportunities (90%) Selected characteristics - 47 years old (average) - Men - Unemployed (average spell 12.3 months) - 25 years of paid work experience years of schooling (average) - At risk of poverty - Average equivalent disposable income: EUR (bottom income quintile) simultaneous employment barriers % of the target pop. Group 4 (11% of the target population): Well-educated prime age adults with weak labour market attachment. Individuals in this group are of prime working age (average age 33) with a recent employment record (96%). However, their attachment to the labour market is weak: 57% only worked for part of the reference period and 33% worked less than 20 hours a week for most of the reference period. This suggests that they are subject to marginal employment and are unable to secure jobs with permanent Policy Analysis Note (PAN) for Spain OECD

23 contracts that are subject to much stricter employment protection. Individuals in this group typically worked at clerk and sales skill level (55%) or higher (25%), and have the highest education levels of all groups. This group has on average 1.2 simultaneous employment obstacles, the lowest of all 13 groups (Figure 4.1). This suggests that either employment barriers each affect employment possibilities independently, or that members of this group were work ready and unemployed for only a fairly short period of time during the reference period: indeed, 81% of this group were in employment by the time of interview. The main two barriers characterising this group are low work experience relative to potential experience (37%) and high levels of household income that do not directly depend on their own work effort (33%). Box 4.4. Group 4: Well-educated prime age adults with weak labour market attachment Main employment barriers Low work experience (37%) Non-labour incomes (33%) Selected characteristics - 33 years old (average) - Employed - 12 years of paid work experience - 13 years of schooling (average) - Average equivalent disposable income: EUR (bottom two income quintiles) simultaneous employment barriers % of the target pop. Group 5 (9% of the target population): Early retirees with weak financial incentives. This group is relatively old (average age 61 years) and the majority are men (73%). They have considerable paid work experience (37 years on average) and have the highest equivalent disposable income of the 13 groups (EUR /year on average). Most previously worked at the skill level of craft and machine operators or clerks and sales people, and their level of education is no different to the average among the target population of 10.4 years. The proportion facing the low skills barrier is thus 41%. Most members of this group are labour-market inactive (77%), with 48% describing themselves as retired, and 17% as being unfit for work. 40% can draw on income sources that are independent to their own work effort, which in most cases are old-age benefits (37% receive an average of EUR /year). Moreover, 31% receive sickness and disability benefits (EUR /year on average) and 26% receive unemployment benefits (EUR 8 678/year on average). For 41% of the group these earnings replacements benefits are high relative to their potential earnings in work, which further weakens financial incentive to undertake paid work. This group are less likely to face multiple simultaneous employment barriers (see Figure 4.1) than other groups, but 56% face more than one barrier, the most common combination being low education and skills and weak financial work incentives. Box 4.5. Group 5 Early retirees with weak financial incentives Main employment barriers Earnings replacement (41%) Education / Skills (41%) Non-labour incomes (40%) Selected characteristics - 61 years old (average) - Men - Retired/Inactive - 37 years of paid work experience years of schooling (average) - Average equivalent disposable income: EUR (top two income quintiles) simultaneous employment barriers % of the target pop. Policy Analysis Note (PAN) for Spain OECD

24 Group 6 (7% of the target population): Unemployed women with low work experience. This group consists mostly of women (67%) in prime working age (average age 49), who were unemployed for the majority of the reference period (70%) and still unemployed at the time of the interview (68%). However, only 56% of the group reported that they were actively looking for work at the time of the interview, indicating that they had become discouraged from looking for work after a long spell of unemployment: these unemployed individuals have the longest average unemployment spell of any group (12.9 months). Although 96% have worked in the past, for 87% of them work experience is low given their age with average work experience among this group being 12 years. Other barriers often faced by this group are scarcity of job opportunities (55%) and low skills (41%): most members of this group do not have an upper secondary education, and most previous employment was at the skill level of clerks and sales people or lower. Most individuals in this group face the low work experience barrier and one of these other barriers, and some face all three (see Box 4.6 below). The average number of barriers faced by this group is 2.5. Despite being mostly unemployed, only 35% of this group receive unemployment benefits, and the amount received is relatively low at EUR per year. As a result, 54% of this group are at risk of poverty. Box 4.6. Group 6 Unemployed women with low work experience Main employment barriers Low work experience (87%) Opportunities (55%) Education / Skills (41%) Selected characteristics - 49 years old (average) - Majority Women - Unemployed (average spell 12.9 months) - 12 years of paid work experience years of schooling (average) - At risk of poverty - Average equivalent disposable income: EUR (bottom income quintile) simultaneous employment barriers % of the target pop. Group 7 (6% of the target population): Low-skilled women in unstable jobs. Individuals in this group are women (80%) of prime working age (average age 44) with a recent employment record (93%). However, this group s labour market attachment is weak: 67% worked for only part of the reference period and 35% worked less than 20 hours a week for most of the reference period. This suggests that this group are subject to marginal employment and are unable to secure jobs with a permanent contract that are subject to much stricter employment protection legislation. Moreover, many of this group have an incomplete employment record: 46% have low levels of work experience relative to their potential. The largest barrier to employment in the group is a combination of low levels of education (third lowest average level of education among the 13 groups at 9.6 years) and low professional skills (83% previously worked at the craft and machine operator skill level or lower). This group has on average 2 simultaneous employment obstacles, with low work experience relative to potential experience (46%) frequently overlapping with low skills (81%). Policy Analysis Note (PAN) for Spain OECD

25 Box 4.7. Group 7 Low-skilled women in unstable jobs Main employment barriers Low work experience (46%) Education / Skills (81%) Most frequent characteristics - 44 years old (average) - Women - Employed - 17 years of paid work experience - Lower Secondary education: 9.6 years of schooling (average) - Average equivalent disposable income: EUR (bottom two income quintiles) - 2 simultaneous employment barriers % of the target pop. Group 8 (6% of the target population): Labour-market inactive mothers with low work experience. Individuals in this group are prime age (average age 40) women living in families with a partner who is in paid work (80%) and their young children (99%). These persons have on average 1.5 young children with the youngest being five years old. The majority report being economically inactive (62%) at the time of interview. 16% report being unemployed (16%), but only 9% were actively seeking a job at the time of the interview. The most common barrier to employment is that most (79%) have care responsibilities for their young children. The other main barrier is that although most of these individuals have past work experience (81%), for many (63%) this is low relative to their age and education level. The average number of simultaneous employment barriers is 2.6: in addition to these two main barriers, some members of this group face scarce job opportunities (35%), have high levels of non-labour income (16%) or health limitations (12%). Box 4.8. Group 8 Labour-market inactive mothers with low work experience Main employment barriers Care (79%) Low work experience (63%) Most frequent characteristics - 40 years old (average) - Women - Inactive - Couple with children - 10 years of paid work experience years of schooling (average) - Average equivalent disposable income: EUR (bottom two income quintiles) simultaneous employment barriers % of the target pop. Group 9 (5% of the target population): Low-skilled individuals with health problems and high levels of earnings-replacement benefits. These individuals are older (average age 52) and 99% report a long-standing physical or mental limitation, of which 37% are severe limitations. 69% receive sickness and disability benefits (EUR /year, on average) and for 45% of this group, these benefits are high relative to their potential earnings in work, which could weaken their financial incentives to seek employment. Partly due to their health, individuals in this group are currently largely labour-market inactive (84%) but most (85%) have some previous work experience. The group has the second lowest level of education (8.9 years on average) and this creates a barrier to re-employment as 74% have attained only lower secondary education or below. Policy Analysis Note (PAN) for Spain OECD

26 Box 4.9. Group 9 Low-skilled individuals with health problems and high levels of earnings-replacement benefits Main employment barriers Education/Skills (60%) Health (99%) Earnings replacement (45%) Most frequent characteristics - 52 years old (average) - Inactive - 22 years of paid work experience years of schooling (average) - Average equivalent disposable income: EUR (bottom three income quintiles) simultaneous employment barriers % of the target pop. Group 10 (5% of the target population): Educated parents in short-term unemployment or working part time. This group is of prime working age (average age 39), has children (95%) and is relatively well educated (43% at tertiary level, 12.8 years of education on average). The main employment barriers they face are a lack of job opportunities (59%) and the need to care for children (58%). As such, many of these individuals are work ready and indeed 58% did some work during the reference period, of whom 17% worked part time for most of the reference period. Moreover, by the time of the interview 37% were in employment, though the interrupted work patterns of this group suggest that this could be marginal employment on temporary contracts. The average number of employment barriers faced by this group is 2.1: in addition to these two main barriers some members of this group have high incomes from sources that are not related to their own work effort (35%), low skills (21%) and high levels of earnings replacement benefits (17%). Box Group 10 Educated parents in short-term unemployment or working part time Main employment barriers Care (58%) Opportunities (59%) Most frequent characteristics - 39 years old (average) - Unemployed (average spell months) - 17 years of paid work experience years of schooling (average) - Average equivalent disposable income: EUR (bottom three income quintiles) simultaneous employment barriers % of the target pop. Group 11 (5% of the target population): Unemployed youth without any past work experience facing scarce job opportunities This group consists of young people (average age 24) most of whom were unemployed during the reference period (82%). Between the reference period and the interview only 9% had found employment, despite their high levels of motivation (65% of the group were actively seeking a job at the time of the interview). 71% were unemployed throughout the reference period and at the time of the interview. This high level of unemployment suggests a lack of job opportunities, which is an employment obstacle for everyone in the group. Low skills (64%) are another challenge to finding employment that the group faces. Individuals in this group are likely to face three or more simultaneous employment obstacles, the second highest among the 13 groups (Figure 4.1). Benefit coverage among this group is low, with the result that 48% of this group are at risk of poverty and 38% face material deprivation. Policy Analysis Note (PAN) for Spain OECD

27 Box Group 11 Unemployed youth without any past work experience facing scarce job opportunities Main employment barriers Opportunities (100%) Education /Skills (64%) No work experience (71%) Most frequent characteristics - 24 years old (average) - Unemployed (average spell - 12 months) - No past paid work experience - Lower secondary education: 10.7 years of schooling (average) - Average equivalent disposable income: EUR (bottom two income quintiles) simultaneous employment barriers % of the target pop. Group 12 (4% of the target population): Unemployed mothers actively looking for work but facing scarce job opportunities. This group consists mostly of women (85%) of prime working age (average age 35), who were unemployed for the majority of the reference period (82%). These individuals all have young children (the youngest is four years old on average) and most live with their partner who is working (77%). Care responsibilities are therefore a barrier for 90% of the group. They have high motivation (75% were actively seeking a job at the time of the interview) but struggle to find work due to scarce job opportunities (100%). Although 83% of the group have worked before, for 56% of them their work experience is low relative to their age and education level. Another obstacle is low professional skills (63%): most do not have an upper secondary education and in almost all cases previous employment was at the skill level of clerks and sales people or lower. These obstacles are often faced simultaneously and thus this group has the highest number of simultaneous barriers of any of the 13 groups (3.6 on average). This group also contains the highest proportion of migrants of any of the groups (38%). Box Group 12 Unemployed mothers actively looking for work but facing scarce job opportunities Main employment barriers Most frequent characteristics - 35 years old (average) - Women - Unemployed - Couple with children - 10 years of paid work experience years of schooling (average) - At risk of poverty - Average equivalent disposable income: EUR (bottom two income quintiles) simultaneous employment barriers % of the target pop. Group 13 (4% of the target population): Short-term unemployed men with high earningsreplacement benefits facing scarce job opportunities. The majority in this group are prime age (average 41 years old) men (67%) who were unemployed during most of the reference period (94%). However, 69% did at least some paid work during the reference period, suggesting that they had only recently been made redundant. The group has the second highest equivalent disposable income of the 13 groups (EUR /year on average). The most common employment barrier they face is a lack of job opportunities (92%). Although members of the group have a long employment record (19 years on average) their previous jobs have been in low-skill occupations (56% at craft and machine operator skill level or lower), which is also likely to worsen their re-employment prospects. 81% received unemployment benefits (EUR /year, on average) and for 67% of this group, these benefits were high relative to their potential earnings in work, which could weaken their financial incentives to seek or take up employment. These barriers are often faced simultaneously: the average number of barriers faced by members of this group is 2.8. Policy Analysis Note (PAN) for Spain OECD

28 Box Group 13 Short-term unemployed men with high earnings-replacement benefits facing scarce job opportunities Main employment barriers Most frequent characteristics - 41 years old (average) - Men - Unemployed - 19 years of paid work experience years of schooling (average) - Average equivalent disposable income: EUR (bottom three income quintiles) simultaneous employment barriers % of the target pop. Figure 4.1. Share of individuals facing multiple employment barriers in each group In descending order of shares facing at least three barriers 4 or more barriers 3 barriers 2 barriers single barrier no major barrier Group 12 Group 11 Group 9 Group 13 Group 2 Group 1 Group 8 Group 6 Group 10 Group 7 Group 3 Group 5 Group 4 Target pop Note: Group sizes are reported on the horizontal axis. See Box 2.1 to Box 2.11 for details. Source: Calculations based on EU-SILC Policy Analysis Note (PAN) for Spain OECD