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EACEA National Policies Platform


3. Employment & Entrepreneurship

3.1 General context

Last update: 31 March 2021
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  1. Labour market situation in the country
  2. Main concepts

Labour market situation in the country

The situation of employment in Spain is still affected by the sharp drop in economic activity from 2008 following the financial crisis at European and global level. Within this context, public policies designed by different administrations concerning employment emphasise entrepreneurial scope as well as the development of skills as a key factor for the development of the labour market and the promotion of employment. In spite of this, it can be observed a trend of job recovery from 2014.

Legislation on labour matters in Spain is produced by the State, the exclusive agent for labour market regulation according to the Article 149.1.7 of the Spanish Constitution (Constitución Española). In this regard, Law 3/2012, of 6 July, on urgent measures for the reform of the market (Ley 3/2012, de 6 de julio) set the basis in order to favour employability of workers, the promotion of permanent contracts of employment and other measures.

The Spanish National Statistical Institute (INE) is the national body in charge of gathering data on labour market trends and their impact on the population. The INE is responsible for the Labour Force Survey (Encuesta de Población Activa, EPA). The financial crisis has had an intense impact upon the labour market in Spain. Latest data from the EPA for the fourth quarter of 2020 shows an unemployment figure of 3,719,800 people, or 16.13% of the active population, numbers directly affected by the pandemic situation.

During 2020 the Spanish economy experimented an important breakdown, the number of unemployed has risen 1,51% and the evolution of young people’s figures in the labor market present one of the lowest rates of employment in the European Union According to the data presented by INE unemployment of young people (16 to 24 years) has increased to a 39.9% from 2019 to the first semester of 2021.

According to the 2019 report Youth and Labourt Market Report (Informe Jóvenes y Mercado de Trabajo 2019) the unemployment rate for young people between the ages of 16 and 24 stands at 33.5%, 3.0 points lower than one year ago. This is more than 18 points below the maximum reached in the first quarter of 2013. For young people up to 29 years, it drops to 28.2% (-3.4 points lower than in the fourth quarter of 2016). In the last year the number of young people under 25 years of age unemployed has fallen by 55,700 people, at an annual rate of -9.1%. Among young people aged up to 29, a fall of 110,200 accumulates, at a rate of -9.8%. In the fourth quarter of 2017, 1,014,400 young people under 30 are unemployed, according to the EPA. Among young people, the incidence of long-term unemployment according to the duration of unemployment is 27.2% of the total of unemployed young people aged 16 to 24, compared to 45.7% of adults.

The same report presents a total of 39,138 training and formation contracts for this year, representing 1,357 more, or 3.6%, compared to those registered the previous year (37,781). Gender equality has been strengthened in the use of this modality, in 2017, women absorb 52.3% of the total number of new hires, compared to 43.3% in 2011 or 31.8% in 2007. On the other hand internship contracts were 92,609, with an increase of 6.4%, 5,544 more contracts, with respect to registered in 2016 (87,065). In 2017 there was a slight rise in training and apprenticeship contracts, after the containment observed in 2016, although at levels much lower than those reached in previous years. On the bright side, internship contracts raised a 6.4% in 2017 in comparison with 2016 (Youth and Labourt Market Report, 2018: p.20). Lastly, during 2017 the registrations in the Special Regime for Autonomous Workers (self-employment) of those under 30 registered a decrease of -7.7%, representing young people up to 30 years of age, representing 8.1% of the total number of self-employed affiliates.

As said, this outlook has dramatically changed sin the start of the pandemic in 2020. The youth unemployment rate in Spain for young people aged 15 to 24 years, according to Eurostat, remains well above the EU average at 39.9% compared to 14.8% in the EU-27.

In this sense, the youth unemployment rate is still approximately twice the general unemployment rate of the whole working age population, as it was before the beginning of the crisis. This is a situation very similar to the of the EU average and disparate from that of some of the countries. The number of youth unemployed is much higher than the number of general unemployment rate, as is the case in Italy or, to a lesser extent, France compared to Germany, where the general and youth unemployment rates are closer although since 2016 they tend to be separated, being, at the same time, relatively more casualties.
As for the so-called youth unemployment ratio, i.e. the incidence of unemployment on the whole of the young population is significantly lower and has tended to decrease since 2013: in the first quarter of 2020 the incidence is 11.4% among young people aged 16 to 24, falling by 0.9 point per year, and 13.3% among those up to 29 years of age. This situation is due to the high level of inactivity among very young people, which remains very high after the increase experienced during the crisis, linked to the extension of the periods of study. In this sense, at the moment most young people are in education, especially in the age range of 16 to 19 years (less than a fifth, about 13%, are on the labour market), this situation is reversed for those aged 25-29, where the majority, about 83%, are in the labour market (among those aged 20-24, almost half of young people are in the labour force, 52%).

Among unemployed youth, the predominant level of education is low. Almost the half of the young people up to 24 years of age who are unemployed, 49.1%, have this level of education (43.3% among young people up to 29 years of age) and only 16.9% have high education (28.1% among young people up to 29 years of age). This situation maintains the line observed since the third quarter of 2016.

The incidence of unemployment is lower for higher education levels, which have an unemployment rate of more than 20 pp below those with a low educational level: 21.7% compared to 42.3% among young people up to 24 years of age (17.2% compared to 35.2% for young people up to 29 years of age). In the first quarter of 2020. These differences are accentuated, as a result of the greater increase in unemployment experienced this quarter among young people with a low level of education. As for the long-term unemployment rate (LTU) among young people, in first quarter of 2020 has increased 0.5 pp over the previous quarter among young people up to the age of 24, at 6.2%, down by 0.1 pp among young people up to 29 years old, at 5.1%. In any case, the downward trend, as these rates are below the recorded in previous years. The rate of long-term unemployment tends to converge between men and young women: among those up to 24 years old, it is 6.1% and 6.3%, respectively, and among young people up to the age of 29 the rates drop to 5.5% for men and 5.0% for women.

Of the total of 1,159,500 LTUs in the first quarter of 2020, 91,000, or 7.9%, were young people under 25. The incidence of LTU among young people is traditionally lower than in adults and is declining at a faster rate: 18.7% of unemployed young people aged 16 to 24 have been unemployed for a year or more, compared to 35.1% in adults.

The Europe 2020 Strategy includes the objective of reducing the early school dropout rate among the population aged 18 to 24 years to 10% in the EU-28 by 2020. In the case of Spain, the goal is to reduce it to 15% in 2020, with an intermediate target of 23% in 2015, already reached in 2014. The percentage of people aged 18 to 24 years who did not continue their education after completing the first stage of secondary education was 18.2% in 2017, keeping the downward trend since 2008, year in which it reached its maximum with 31.7%, according to data from Eurostat.

In 2019, according to the latest available data from Eurostat, this trend continued and was reduced to 17.3%, 0.6 points lower than the dropout rate reached in 2018. In the EU this rate stood at 10.3%.

Main concepts

The workforce in Spain is defined as people of 16 years of age or over who, during the reference week (previous to that when the survey was carried out), were involved in the production of goods and services or were available and in the condition to join such production. They are subdivided into employed and unemployed people.

Employed persons are people of 16 years of age or over who, during the reference week, have worked for at least one hour in exchange for payment, either money or in kind, or those who, having a job, have been temporarily out of the same due to illness, holiday, etc.

The unemployed are people of 16 years of age and over who, during the reference week, have been out of work, available to work and actively searching for employment. People who have already found a job but are still waiting to start working are also considered to be unemployed as long as they meet the first two conditions.

The long-time unemployed are people who have been out of work for over a year.

The inactive are people of 16 years of age or over not included in any of the previous categories.

Discouraged workers are people who do not have a job and are looking for a job as they believe they will not find it, whether they have or have not looked for it before, although they are available for work.

Ninis’ are young people of up to 25 years of age who do not work or study, or follow any type of training either. This is the Spanish equivalent to the NEET category (not in employment, education or training).