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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 more than 47 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 2019, the registered population in Spain grew for the third consecutive year due to an increase in immigration, compensating for a natural population decrease. The fall in the number of Spanish nationals was accompanied by a rise in the number of non-nationals, both from the European Union and from non-EU countries, principally South America and Africa.

The Spanish economy is the fourth largest in the euro zone, the fifth largest in the European Union and the fourteenth in the world in terms of nominal gross domestic product (GDP). It is in an expansionary phase, with significant growth in GDP rates driven mainly by domestic demand and the external sector. This growth has been slowing over the course of the last year. When the Spanish Government presented the macroeconomic framework to the European Commission, it forecast GDP growth of 2.1 % in 2019 and 1.8 % in 2020. This growth is higher than the average rate in the EU, and will make it possible to continue generating employment. With full-time job creation rates in 2019 and 2020 at 2.3 % and 2.0 %, respectively, this could reduce unemployment rates to 13.8 % in 2019 and 12.3 % in 2020. Apart from the anticipated short and medium-term development, among the most significant challenges and vulnerabilities facing the Spanish economy are the ageing population and high unemployment rate.

In tandem 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 2019 with year-on-year growth of 2.1 %. The number of unemployed people was also curbed, with unemployment at 13.9 %, six percentage points down from the previous year. Despite that reduction, 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 in 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.

At the end of September 2019, the number of companies with registered employees in the social security system was 1 327 869, a decrease of 0.6 % compared with the same month in the previous year. More than half of those companies operate in wholesale and retail trade, hospitality services, construction, and the manufacturing industry. During the last year, in absolute terms, the largest increase in companies has been in construction, real estate activities and professional, scientific and technical activities. Conversely, activities in wholesale and retail trade, hospitality services and agriculture, livestock, forestry and fisheries have witnessed most of the decline. 

According to information from the Jobs Observatory of the National Public Employment Service, this positive trend in the employment market is also recorded by the administration: the number of unemployed persons registered with public employment services in September 2019 declined significantly to just over three million, while the number of social security contributors increased to a total of 19.2 million, and the recruitment figure rose above 22.6 million. The presence of employees from other countries is an important factor in these indicators, given that they account for 12 % of unemployed persons, 11 % of social security contributors, and 19 % of contracts.

The largest numbers of EU employees paying social security contributions are from Romania, Italy, the United Kingdom, Bulgaria, Portugal, and France, while the largest numbers from outside the EU are from Morocco, China, Colombia, Ecuador, Venezuela, and Bolivia.

Despite improving, Spain’s labour market still has severe structural problems, such as high unemployment rates among young people and those aged over 50, the high percentage of long-term unemployed, low-skilled workforce, and the high level of temporary employees.


Text last edited on: 08/2020