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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 2020 the registered population in Spain grew for the fourth consecutive year due to an increase in immigration, which compensated for a natural population decrease: the fall in the number of Spanish nationals was accompanied by a rise in the number of foreign nationals, both from the European Union and from non-EU countries, principally from South America and Africa.

 

The Spanish economy is the fourth largest in the euro area, fifth largest in the European Union and fourteenth in the world in terms of nominal gross domestic product (GDP). It has been in an expansionary phase for the past six years, with significant growth in GDP rates driven by domestic demand and exports. In early 2020, Spain’s growth was stronger than in previous economic cycles and exceeded the European average. The health crisis caused by COVID-19 changed this. As elsewhere in the world, the public health measures and restrictions of movement and economic activity had an impact.

 

That impact was not uniform. Most affected were the leisure-related sectors: tourism, hotels, catering, culture and specific groups of workers, especially temporary jobs for the least qualified and young people, and the self-employed.

 

In this uncertain situation, Spanish central government forecasts suggest an 11.2 % fall in GDP in 2020, depressed by weak consumer spending and investment. In 2021, Spain is expected to bounce back from most of this fall. Growth of 7.2 % is predicted for 2021 and, if the recovery plans bear fruit, the figure could be as high as 9.8 %. While employment levels are in line with overall economic activity, the measures adopted have cushioned the impact on employment, compared with past recessions. An unemployment level of around 17 % is predicted, up three percentage points on 2019. Thus it is hoped that the return to work in 2021 will bring the level down to 16 %.

 

Like the economy as a whole, the Spanish labour market has been affected, recording a fall in employment and higher unemployment. The Labour Force Survey (LFS) showed a 3.51 % year-on-year decline in employment, accompanied by a spike in unemployment at 15.82 %. The level of joblessness stood at around 16.3 %, 2.4 percentage points above the level of one year before. Thus Spain remains the EU country with the second highest unemployment.

 

From an employment viewpoint, Spain’s business structure is highly fragmented into small units. In fact, eight out of10 companies in Spain have fewer than three employees. The largest percentages of small businesses occur in the service sector, especially retail and wholesale. 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, aerospace, the agrifoods sector and the automotive industry.

 

At the end of September 2020 the number of companies that had employees and were registered with the social security system was 1 286 659, marking a decrease of 3.1 % compared with the same month of the previous year. More than half of those companies operate in wholesale and retail trade, hotels and catering, construction and manufacturing industry. The biggest loss in the number of businesses in absolute terms over the past year was in wholesale and retail, hotels and catering, transport and warehousing, other services, manufacturing industry and arts, recreation and entertainment. Numbers of businesses rose in only two sectors: energy supply and finance and insurance.

 

According to information from the Observatory of Occupations in the Public Employment Service (SEPE Occupations Observatory), the crisis has also made itself felt in government records: the number of unemployed persons signing on with the SEPE services in September 2020 topped 3.7 million, a year-on-year increase of 22.62 %. There was a 1.98 % fall in the numbers paying social security contributions, to just above 18.8 million. The 23.39 % year-on-year decline in recruitment indicated slightly more than 17.3 million contracts of employment. The presence of workers from other countries is an important factor in these indicators, given that they account for 14 % of unemployed persons, 11 % of social security contributors and 20 % of contracts.

 

The largest numbers of EU workers 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.

 

Looking beyond the expected short and medium-term trends, Spain's main economic challenges and vulnerabilities include: ageing population; high unemployment (highest among young people); long-term unemployment; the reported temporary nature of the work; and the strong concentration of small and medium-sized enterprises, above the European average. In addition to these imbalances, and the knock-on effects of the pandemic, the Spanish labour market faces the fourth industrial revolution: robotisation; artificial intelligence; the internet of things; and general digitalisation of the economy.

 

Text last edited on: 10/2021