Thus, insofar as the proportion of young workers and low wage earners in the sectors most affected by the pandemic has  1  By way of illustration, according to the Labour Force Survey the sharpest declines in terms of employment to Q3 were in hotels and restaurants (-19.3%) and artistic activities (-9.1%), while in other market services sectors, such as financial activities (4.4%), real estate activities (2.3%) and information and communications (1.8%), there were year-on-year increases in employment in that period. In industry, employment fell by a year-on-year rate of 4.5%, while in the nonmarket services sectors it increased by 1.9%. By region, employment posted the biggest year-on-year declines in the Canary Islands (-8.1%) and the Balearic Islands (-7,4%), while there was a less marked fall in the Basque Country (-1%) and Asturias (-1.3%), and a slight year-on-year increase in Murcia (0.1%). 5  been relatively high,2 the crisis has borne down particularly sharply on those workers showing a greater initial degree of vulnerability and with more limited resources to sustain their spending. This might influence the future path of inequality in Spain.3 As regards business dynamics, since the onset of the crisis the number of firms registered for social security purposes has fallen most appreciably, by almost 84,000 firms from endFebruary to end-September. That marks a year-on-year decline of 6.1%, which is down on the peak in spring (10.5% in April), but still very high. This evidence is consistent with the analyses conducted by the Banco de España.
12103 6 For further details please refer to https://www.bankofengland.co.uk/speech/2017/changing-risk-and-the-search-for-yield-on-solvency-2capital 7 Financial Stability Report, December 2016, Bank of England. 5  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  insurers have used internal securitisations backed by their equity release mortgage portfolios in order to create a senior tranche with the required fixed cashflows. Let us dig a little deeper into the Matching Adjustment. In principle, the higher discount rate on liabilities is intended to reflect the component of the spread over risk-free rates that compensates other investors for risks to which the insurers are not exposed. In the case of bonds, this is the liquidity premium for the risk that they might have to sell into secondary bond markets at a time when credit spreads are wide. Annuity writers are not exposed to this risk and can therefore earn the liquidity premium provided they can bear the credit risk and hold the assets until maturity. Mechanically, however, the Matching Adjustment is not calculated by estimating directly the market premium for any risks to which insurers are not exposed. Rather it is calculated indirectly as a residual by subtracting from the yield on an asset (1) risk-free rates and (2) an estimate of the required premium for risks to which insurers are exposed. In the case of bonds, insurers are exposed to the credit risk that the issuer is unable 8  to pay interest or principal at maturity.