This 2022 snapshot of the job market unfolds against a backdrop of war in Europe and inflation at its highest in four decades. Spain ends the year with the strongest employment level in the entire historical series and the lowest unemployment rate since 2007. Bold headlines indeed, yet the year also hides warning signals beneath the surface. The year as a whole shows growth, but there are signs of a notable slowdown heading into the next year.
Employment slows at the end of 2022, but closes in record numbers: 20.3 million employees
The data leave a mix of hopeful progress and persistent challenges. Labor reform has kept recruitment conditions improving, even as end-of-month effects remain painful and disparities persist across gender and age groups. The self-employed category is shrinking, and it remains to be seen how the new registration rules will fit in with practices already in effect. These are the key takeaways from the annual workforce data released this Tuesday by the Ministries of Labor and Social Security.
Employment: Slowing but reaching record levels at year’s end
Spain finishes 2022 in a way that resembles a long-distance runner who slows down at the final stretch yet still carries a strong pace. Total registered workers with Social Security reach 20.29 million, the highest figure in the records. Still, the momentum that began the year could not be sustained through the final miles after several consecutive record years since the COVID-19 shock in March 2020.
Employed people rose sharply, with 471,360 more workers than a year earlier. And there were gains in job quality as well. In 2022, labor reform left a substantial imprint: 11.2 million new contracts were signed, nearly six million fewer than before the reform, while five million people shifted into permanent contracts, bringing the total permanent jobs to seven million. It’s a stark contrast that, by international standards, signals a clear shift in Spain’s employment dynamics after decades of gradual change.
Unemployment: lowest rate since 2007
Spain has long faced the challenge of keeping unemployment low, especially in the context of a Europe-wide outlook. In total, 2.8 million people remain outside the labor force, seeking work. The year closed with the lowest unemployment rate since 2007, though still high compared with much of the continent. Over the past 12 months, Sepe recorded a fall of 268,252 unemployed individuals, reflecting the broader uncertainty of the past decade and a half.
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Positive overall trends do not erase persistent gender gaps, which remain evident in unemployment figures. More than half a million unemployed women versus men highlights ongoing disparities, even as both groups participate more in the labor market overall. Men saw a larger annual decline in unemployment, down by about 10.5%, while women saw a 7.3% drop.
How will employment develop in 2023?
Prospects for the coming year are uncertain and depend on whom you ask. The government remains optimistic, projecting meaningful growth relative to pre-pandemic levels. Other institutions offer a more cautious view, predicting slower but positive progress.
Recent forecasts from the Bank of Spain anticipate roughly 0.5% growth in hours worked during 2023, signaling a marked slowdown from an estimated 4.1% increase in 2022. They also project a slight uptick in the unemployment rate from the current 12.8% to around 12.9%.
The government presents a more upbeat scenario, including a forecast of about 2.9% GDP growth in 2023 and an overall rise in employment toward 21 million workers, a new historical peak.
Other analysts offer intermediate views. Randstad, the temporary staffing firm, expects continued employment growth but at a slower pace than the government forecast. Their projection suggests two out of every three companies will expand their workforces, ending 2023 with about 20.6 million jobs and an unemployment rate near 13.2%.
Self-employment slowdown
Despite pandemic-related shocks, self-employment expanded in the previous years but began to ease. By December 2022, the number of self-employed workers rose only slightly above the December 2021 figure, ending the year with a modest net gain. The sector sheds more firms than it adds, with nearly 19,000 self-employed businesses disappearing over the year. Gains in specialized professional activity, health, and construction helped soften the impact, offsetting losses elsewhere.
Catalonia closed 2022 worse than Madrid
Even amid multiple economic shocks from war, inflation, and lingering pandemic effects, Catalonia finished 2022 with employment growth and falling unemployment, reaching the best levels seen since before the crisis in 2019. By year-end, 96,649 more people were employed in the four Catalan provinces, bringing total Catalan Social Security registrations to 3.6 million. Still, the region trailed Madrid, which posted a 3.9% rise in employment compared with Catalonia’s 2.75% for the year. The Canary Islands and Balearic Islands posted the strongest gains, up 5.2% and 3.95% respectively, as hospitality and services regained vigor with renewed tourism activity.