Spain | Job market slowing and wages rising

Summary

As we discussed in our latest Quarterly Labour Market Observatory, conducted jointly with Fedea and Sagardoy Abogados, job creation has continued to grow in Spain over the last few months, but is now showing signs of slowing.

Key points

• Key points:
• This slowdown can be seen in the Social Security affiliation data for the months of June to September, with monthly increases in the number of jobs barely reaching 20,000, well short of the levels seen from January through May.
• Notably, Social Security affiliation has been the best performing indicator during the post-COVID recovery, having surpassed February 2020 levels by 6.2%.
• The buoyant job market allowed the unemployment rate to fall to 11.6% in the second quarter. BBVA Research’s real-time forecasts point to an increase of a few tenths of a percentage point in the third quarter, although this will be down to seasonal factors.
• One of the most interesting changes in the latest Quarterly Labour Market Observatory is the inclusion of a wage tracker. Data for the second quarter show that wages have continued to grow, while the increase in labor costs slowed, more per worker than per hour, due to the modest increase in Social Security contributions.
• The rise in contribution bases and the entry into force of the Intergenerational Equity Mechanism meant that employer contributions played more of a role in pushing up labor costs in the first quarter of 2023, while wages accounted for the recovery in remuneration in the second quarter.

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