Spain | Labor market outlook for 2026

Summary

Employment is expected to increase by 2.3% in 2026, while the unemployment rate is projected to decline to 10% on an annual average basis. If these projections materialize, the Spanish economy would have generated more than 1.5 million jobs over the 2024–2026 period.

Key points

• Key points:
• Pending the release of final data for the year, all indications suggest that 2025 has been a positive year in terms of economic activity and employment, exceeding initial expectations.
• According to BBVA Research estimates, GDP is expected to have grown by 2.9% over the year as a whole, driven by resilient domestic demand and a stronger rollout of NGEU European funds.
• This momentum has carried over to the labor market. Social Security affiliation and LFS employment are estimated to have increased by around 2.5% compared with 2024.
• Employment growth has continued to rely heavily on the foreign-born population, which has been essential in offsetting the aging of the native labor force and meeting demand in key sectors.
• However, the outlook for 2026 is not without risks, stemming from international uncertainty and limited productivity gains. As noted by the OECD, Spanish productivity and income per capita continue to lag behind the European average, partly due to the relatively small average size of firms.

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