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Spain - National Level

Short overview of the labour market


Spain, located in the south-west corner of the European continent, has an area of over half a million km² and a population of approximately 46.5 million. In addition, Spain receives over 80 million tourists per year, many of whom are Europeans who reside there for long periods of time. In fact, it is the EU country that receives the highest number of tourists. In 2018 the registered population in Spain grew slightly for the second consecutive year due to the increase in immigration, despite a decrease in the number of Spanish nationals.

The Spanish economy is the fourth largest in the euro area, the fifth in the European Union and the thirteenth in the world in terms of gross domestic product (GDP). It is in an expansionary phase, with significant growth in GDP rates of over 3 %, driven mainly by domestic demand and the foreign sector. The Government is confident that the macroeconomic scenario accompanying its budget plan will continue in this expansionary phase, although more a moderate GDP growth of below three percentage points is expected for the coming years. Therefore, employment equivalent to full-time is expected to continue to rise over the medium term with the creation of more than 800 000 jobs over the next two years that will help reduce the high unemployment rate.

In tune with the economy as a whole, the Spanish labour market will continue to improve as it has over the last few years, creating jobs and reducing unemployment. The Labour Force Survey (LFS) indicated a slowdown in employment growth in the third quarter of 2018 with year-on-year growth of 2.5%, while the number of unemployed continued to decline swiftly with an unemployment rate of 14.6 %, nearly two percentage points down from last year and below the 15 % threshold for the first time since the beginning of the crisis. Nevertheless, Spain has the second highest unemployment rate in the European Union.

From an employment standpoint, Spain’s business structure is highly fragmented, consisting of small business units. In fact, eight out of every 10 companies in Spain has two or fewer employees. The largest percentage of small enterprises is in the services sector, especially trade. In contrast, the bulk of large companies is concentrated in the industrial sector. Moreover, a significant number of large companies are major international players in sectors related to infrastructure development, renewable energy, tourism, banking, insurance, the textile industry, health technology, aeronautics, the agri-food sector and the car industry.

The number of active companies in 2018 increased by 1.7 %. This was the fourth increase after six consecutive years of decline. In the services sector, this increase was tempered by a slight decrease in the number of companies engaged in trade. However, the number of construction and industrial undertakings grew by 2.4 % and 4.0 % respectively. The creation and disappearance of companies is a very dynamic process in Spain: only 16.8 % of companies are 20 or more years old and one in five have not yet completed their second year as active economic entities. Industrial companies account for the largest proportion of long-established undertakings while recently created companies are linked to the services sector, particularly accommodation and food services. The sectors with the highest number of new undertakings in net terms were real estate and health-care. On the other end of the spectrum, the retail and electricity supply sectors had the largest negative balance.

According to information from the Public State Employment Service’s Occupational Monitoring Centre, this positive trend is also reflected in labour indicators: the number of unemployed persons registered with public employment services in September of this year declined significantly to 3.2 million while those on the social security rolls totalled 19 million and hiring rose by 3.12 %.

Slightly more than two million foreign workers are paying social security contributions, increasing for the fourth year after seven consecutive years of decline. The largest number of EU workers are from Romania, Italy, the United Kingdom and Bulgaria, while the largest number from outside the EU are from Morocco, China, Ecuador and Bolivia.

Although improving, Spain’s labour market still has severe structural problems such as high unemployment rates among young people and workers over 50, a high percentage of long-term unemployment, low-skilled persons and a large number of temporary workers.


Text last edited on: 04/2019

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