Spain | Progress and challenges of the Spanish labor market

Summary

The labor market is closing 2025 with a combination of good news and structural challenges that persist. The latest data confirm a sustained expansion in employment, which does not prevent a significant gap in employment and unemployment rates from continuing to exist.

Key points

• Key points:
• With seasonally adjusted quarterly advances of between 0.6% and 0.8%, which has allowed the unemployment rate to fall to 10.5% in the third quarter, the lowest since 2008.
• Despite these advances, Spain's unemployment rate remains the highest in the EU (6.0% on average), while the employment rate between 15 and 74 years old (58.7% of the working-age population) is the fifth lowest in Europe.
• According to the Quarterly Labor Market Observatory, prepared by BBVA Research and Fedea, permanent contracts have multiplied by 2.3 since 2019 and permanent intermittent contracts by 8.4, while temporary contracts have fallen by more than 50%.
• Another feature of this stage is the decisive role of immigration. From the fourth quarter of 2019 to the third quarter of 2025, the number of employed foreigners or those with dual nationality has grown by 51.7% (to 21.6% of the total), compared to 4.6% of nationals.
• Moving closer to Europe in terms of employment and productivity requires a qualitative leap: invest in human capital, boost lifelong learning, improve the efficiency of labor market policies and the matching process between vacancies and potential candidates, and take full advantage of the opportunities offered by AI.

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