Spain | Employment on the rise, productivity slowing

Summary

The latest Social Security enrollment figures for March come as welcome news for the Spanish economy, yet they are also a timely reminder that job creation alone is not enough in itself: we also need it to be more productive.

Key points

• Key points:
• The latest release points to quarterly enrollment growth of 0.6% in the first three months of the year, one-tenth of a percentage point higher than in the last quarter of 2024.
• As a result, we are maintaining our GDP growth forecast at 0.7% for the first quarter, raising it slightly to 0.7% for the second quarter, and confirming our annual expectation of 2.8% growth for 2025 as a whole.
• It is an encouraging start to the year, consolidating the resilience the economy has shown since the recovery from the pandemic. However, this impressive job creation has not been matched by an equivalent improvement in productivity.
• Since the economy reached its pre-pandemic activity level in the second quarter of 2022, GDP has grown by 7.4%. However, GDP per hour worked has increased by just 1.5%, accounting for 20% of GDP growth. Productivity per employee shows weaker growth of only 0.6%, representing a meager 7% of GDP growth.
• Spain needs a medium- and long-term strategy that will enable it to address the digital, energy, and demographic transitions from a position of greater investment strength. This means encouraging private investment, which is the engine for improving productivity.

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