Spain's labor market hit a historic milestone in the third quarter of 2023, with the number of employed people reaching a record 22.78 million and the unemployment rate falling to 9.87%, the lowest since 2008. The data, released by the National Statistics Institute (INE), shows that the economy added 486,000 jobs in the quarter, driven by a strong summer tourism season and steady growth in services. The active population also reached a record 25.27 million, meaning more people are either working or actively looking for work.
The last time unemployment was below 10% was in the third quarter of 2008, before the global financial crisis and the subsequent eurozone debt crisis pushed Spain's jobless rate to over 26% in 2013. The current improvement reflects a sustained recovery that has gained momentum since the pandemic. Seasonal hiring in hospitality and retail boosted the numbers, but permanent contracts also increased after labor reforms passed in 2022 aimed at reducing temporary employment.
Despite the overall positive picture, economists point out that the quality of jobs remains a concern. While the number of temporary contracts has fallen, many new positions are in low-productivity sectors such as tourism and domestic services. The unemployment rate for people under 25 remains high at around 27%, signaling persistent youth joblessness. Also, Spain's employment rate is still below the European Union average.
The government celebrated the data as proof that its labor reforms and economic policies are working. The labor minister, Yolanda Díaz, highlighted that the reform has reduced temporary hiring and improved workers' rights. However, opposition parties argue that the figures are inflated by seasonal work and that many jobs are low-paid.
Looking ahead, the labor market faces risks from a potential slowdown in the eurozone, high inflation, and rising interest rates. The Bank of Spain has warned that economic growth may cool in 2024, which could affect job creation. For now, the record employment numbers provide a boost for the government ahead of the upcoming general election.