In 2018, 22.3 M employment contracts were signed in Spain. This record number marks a sixth year of sustained increases, as well as a significant rise over the 17.8 M contracts signed in 2007. Despite the fact that 21% more contracts were signed compared to before the financial crisis, the number of people with Social Security stood at 19 M at the end of 2018, a level very similar to that of 2007 (19.4 million). Analysts at Caixabank Research explains next what is the reason for this contrast.
Spain’s labour market
Experts are forecasting an unemployment rate of 15% in 2018, when it is estimated that Spain’s economy will have reached its GDP growth potential, so that figure could represent its structural jobless rate. This decline in the unemployment rate, the starting point of which was 26% at the lowest point in the economic cycle, is substantial. But it will still be high compared with other eurozone countries.
The amount of unemployed people in Spain – the country’s biggest problem – fell below 5 million in the third quarter of the year, for the first time since 2011. The jobless rate dropped 1.19 percentage points to 21.18%, while the employment rate rose 1%. But the improvement is exclusively due to temporary work contracts.
The Organization for Economic Cooperation and Development (OECD) recently said Spain’s tax system and the “strict” labour laws do not help the country to deal with a black economy accounting for around 18% of GDP. This piece of advice is not new.