Spain | A strategy to improve the labor market

Summary

The labor market will recover from the COVID-19 crisis, but the resolution of its structural weaknesses will still be pending, while it will have to face the challenges of digital transformation, the energy transition and aging. The 2050 Strategy addresses them and proposes a broad package of measures to overcome them.

Key points

• Key points:
• Since 1980 Spain has witnessed an increase in employment of 8 million, while the rate of female employment has grown by 30 points. Also, the gender pay gap has narrowed, millions of migrants have joined the labor force and its average level of qualifications has risen.
• However, the Spanish labour market is unfortunately an anomaly in Europe: its average unemployment rate since 1980 has been 16.9%, compared with the 6.9% of the eight most advanced EU countries (EU-8); while the employment rate is ten points below that of these countries. Our unemployment is also very long-term: in 2019, 36.1% of the unemployed had been looking for work for more than one year.
• The youth unemployment rate (16-24 years old), which is normally twice the overall unemployment rate, was 33% in 2019, compared with 13% in the EU-8. The rates of temporary employment (currently 22% in the private sector and 30.4% in the public sector) and involuntary part-time employment also double the EU-8 figures.
• Our labor regulations make it difficult to hire people on permanent rather than temporary contracts, as severance costs are higher, there is legal uncertainty with layoffs and inflexibility when companies have to face economic, technical, organizational or production changes.
• The Spain 2050 Strategy, presented a few weeks ago, proposes an ample set of measures such as improving company productivity; strengthening and enhancing the efficiency of active employment policies and human capital; modernizing regulations, to reduce unemployment and temporary employment; and increasing the labor force, particularly with respect to young people, women and people over the age of 55.

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