Spain | Employment and productivity after the pandemic

The COVID-19 pandemic triggered an unprecedented disruption in economic activity in Spain. Although the recovery has returned to previous patterns in many respects, a detailed analysis of Spain's GDP and components reveals a more complex picture.

Key points

• Key points:
• Excluding the nine quarters from early 2020, when COVID-19 first impacted the economy, to the first quarter of 2022, trends in employment numbers and the unemployment rate remained broadly unchanged, as if those two years had not occurred. However, the total hours worked paint a different picture.
• From 2014 to 2018, GDP per person employed grew at an annual rate of 0.6%. By the third quarter of 2023, the pace of growth was slightly slower than at the end of 2018 and only 0.3 percentage points higher than at the onset of the pandemic.
• Ideally, productivity per hour worked should increase sufficiently to ensure that a substantial portion contributes to higher GDP per person employed. At the same time, the remainder supports a voluntary reduction in working hours.
• Although Spain has made progress in reducing temporary employment and recovering employment after the pandemic, structural weaknesses persist that limit its ability to converge with the most advanced economies.
• The dual digital and energy transition offers significant opportunities, but also poses challenges for employment and productivity, while also facing a backdrop of major demographic shifts.

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