Spain | From the employment boom to the needed jump in productivity

Summary

Spain grew by 2.8% in 2025, driven by employment and domestic demand. Growth has been more extensive than intensive, with productivity remaining stagnant. Immigration has boosted employment and GDP per capita. The challenge is to raise both employment and productivity by increasing investment and improving its efficiency.

Key points

• Key points:
• The growth pattern in the last quarter confirms what we have been observing since 2022: Spain is growing in a more extensive way (more employment) rather than an intensive one (more output per worker or per hour worked).
• Quarterly National Accounts provide clear signals: in 4Q25, productivity per employed person stagnated, and productivity per hour worked even declined by four-tenths on a quarter-on-quarter basis.
• This diagnosis is consistent with what emerges when comparing the last quarter of 2025 with that of 2019: GDP per capita is 5.6 percentage points above its pre-pandemic level, but GDP per employed person remains virtually flat (three tenths below).
• In 2025, an average of 567,200 jobs were created (2.6%). The decline in the unemployment rate was also compatible with a higher labor force participation rate.
• The main challenge—and the main opportunity—now is for growth in the coming years to result from simultaneously increasing the employment rate and productivity, by boosting investment and improving its efficiency, in order to ensure sustained gains in real wages and overall well-being.

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