The Spanish labor market showed strength and vigor in the face of the end of the crisis and the period of economic expansion that followed. Social Security figures reflect 1.83 million more affiliations than in December 2019, the last month before the pandemic. But the unemployment rate is falling at a slower rate than would be expected with such intensity of job creation over the last five years. Behind this are several elements that spice up this cocktail: the migratory boom, with 90% of the growth in the working population since 2021 explained by foreigners, aging and the pool of long-term structural unemployment that Spain fails to eliminate.
The Bank of Spain highlighted this aspect in its latest quarterly report, presented in September: although everything indicates that unemployment will continue to fall, the intensity and pace with which it will decrease “due to the notable dynamism of the population active”. ” “. He also underlines the effect of the “progressive aging of the active population” which reduces the fluidity of the labor market and the notable “stagnation observed over the past year in the stock of long-term unemployed”, around 1.1 million. people and “with some resistance to falling below 40% [de los parados totales]”. Therefore, The unemployment rate will still remain close to 11% in 2026, indicates the supervisor.
“Immigration explains 90% of the growth in the labor force since 2021. The lack of progress in the labor force among Spaniards reflects the aging population“There are a growing number of people at ages where the activity rate is lower,” explains Miguel Cardoso, chief economist for Spain at BBVA Research.
This suggests that Spain has added a workforce to its economy, but is not creating new jobs relative to the population that was previously willing or able to work, because the labor force participation rate (employees/aged people to work) remained almost unchanged. 58%. The jobs created, for the most part, were carried out by foreigners: “the Job creation among the immigrant population is similar to that which took place between 2000 and 2008 (during the real estate boom).accumulating around 400,000 new jobs per year,” says Cardoso.
“The arrival of people of various nationalities of working age represents a valuable source of talent which, with adequate integration, can significantly boost the labor market,” believes Raúl Sánchez. Foreigners continue to occupy the most precarious jobs and are particularly in the majority in agriculture, the hotel industry and home care.
A long-standing problem
54% of long-term unemployed are 45 years old. In Spain, 40% of the unemployed are long-term, or 1.1 million, as highlighted by the Bank of Spain. “Many of the current unemployed, even if there is a labor shortage, have very little employability (…) and those the “poorly employable” unemployed are those who increase long-term unemployment (This is not an exact correspondence between the long-term unemployed and the unemployable, but the long-term figure is an approximation of the barely employable unemployed),” diagnoses María Jesús Fernández, senior economist at Funcas.
The supervisor indicates that “a good part of the existing stock of unemployed is of a structural nature, which would make it difficult to reduce through advances in activity of a cyclical nature.” “This is where we see the effect of insufficient and misdirected active unemployment policies. With good active employment policies, this problem could be reduced,” summarizes Fernández. “The challenge of long-term unemployment requires structural solutions, such as increased investment in training and in professional connection mechanisms between companies and workers,” says Raúl Sánchez, Spain country manager of the Eurofirms group.
The effect of aging is also long-lasting and will gradually affect the Spanish economy from different angles. “The aging of the population reduces flexibility and mobility in employment, which requires policies that promote adaptation and continuing training,” emphasizes Sánchez.
For the Funcas economist There is a regulatory issue with the design of severance packages.. “This is an effect of labor regulations, in particular severance pay linked to seniority. A 50-year-old worker who has worked in his company for 25 years does not dare change companies, even if he is offered better conditions, because he loses who has acquired the right to high compensation,” he says.
“This prevents efficient allocation of resources, because better companies cannot attract good workers from less competitive companies. When this affects a high percentage of the working population (due to aging), it starts to be a problem for the company. productivity and general competitiveness of the economy”, estimates the economist.
