Labour market challenges in Spain
Fecha: marzo 2024
Raymond Torres and María Jesús Fernández
Labour market
SEFO, Spanish and International Economic & Financial Outlook, V. 13 N.º 2 (March 2024)
The labour market has been typically one of the chief weaknesses of Spain’s productive model. In the last five decades, the unemployment rate has only been in the single digits for a brief period of time before the onset of the financial crisis, fuelled by an unsustainable credit bubble. Moreover, Spanish unemployment has been higher than the rates observed across its European peers virtually non-stop since harmonised data exist. One of the main causes of this long-standing blight is excessively procyclical employment creation and destruction: traditionally, recessionary episodes have led to disproportionate job losses, which are hard to recover during periods of growth. Recently, however, the performance of Spain’s labour market has improved, closing in on European standards, likely a result of a mix of reforms and demographic changes. In particular, employment has become much more resilient to recessionary pressures. Yet, two key weaknesses remain. First, shortcomings in placing jobseekers make unemployment relatively persistent. In Spain, it is not easy to come off the dole queue, a phenomenon that affects less-skilled workers and women looking to rejoin the labour force after maternity leave. Hence the high rate of long-term unemployment. Second, the transition from education to work is difficult, as witnessed by a high rate of youth unemployment by European standards. Also, many young people who do work are over-qualified for the jobs they perform. Given the importance of addressing these challenges to maintaining employment growth and closing the social divide, it will be critical to tackle this sizeable but urgent issue, particularly in light of the pace of technological transformation, accelerated by the deployment of artificial intelligence.