Employment trends following Covid-19 in Spain
The pandemic and the state of alert declared at the start of the crisis were years ago, more than 1,000 days in the past. Since then, the Spanish labor market has steadily recovered from the deep shock that shut down much business activity. The country has endured a real strain—from the war in Europe to the heavy blow of inflation—yet the economy has begun to regain its footing.
How has employment evolved since Covid began? This week, the Ministries of Labor and Social Security released updated data comparing March 2020 with March 2023. The labor reform has reshaped recruitment statistics, transforming programs that once provided broad coverage into resources that support workers. It also adjusted mechanics around collective agreements and self-employment, among other changes, including the new contribution framework.
Employment: 1.3 million more jobs
The early alert led to closures of pubs, restaurants, non-essential shops and many other public venues. Hundreds of thousands of workers were laid off or left without renewal under provisional arrangements. Between March and April, Social Security shed nearly 800,000 participants. Despite short-term layoffs, many firms chose traditional production paths and reduced wage costs in an effort to survive the downturn.
After the financial and real estate downturn, job losses occurred at a pace comparable to the worst moments of the 2008 crisis. From that point, the labor market began a gradual recovery, much like a patient regaining strength after illness. Today, the labor system has gained about 1.3 million employees since March 2020 and reached a historical high in terms of active contributors.
Unemployment: Almost 700,000 fewer people
Statistically, unemployment fell by 686,052 people, reaching a peak of 2.91 million unemployed in March 2023. This marked the lowest level since 2008, when housing and financial bubbles burst. Initially, registrations at Sepe offices surged during the pandemic, and the subsequent path to lowering unemployment proved long and uneven.
Spain has shown a capacity to create jobs quickly in good times, but reducing unemployment remains a challenge. The latest reforms will be tested when the next labor market downturn arrives. Even with today’s gains, there are still nearly one million more unemployed people than in 2007.
More stability through job reform
A few days before Christmas 2021 — the second major turn since the pandemic began — the government, employers and unions implemented a new labor reform. Its aim was to curb the long-standing prevalence of temporary contracts, which had been among the highest in Europe. In the epidemic’s early months, about nine in ten contracts were temporary. Three years later, the balance has shifted to roughly 50-50 between temporary and permanent arrangements.
Some workers may still prefer full-time, permanent contracts, but the reform has delivered more stable forms of work. Among new fixed contracts signed, the distribution remains consistent: around 45% are full-time continuous, 30% are intermittent but steady, and 25% are part-time.
ERTE: From 3.4 million to 15,000 affected
The government’s shield to prevent mass layoffs during restrictions was the ERTE — the Temporary Employment Regulation File — a term few outside the country knew until the pandemic. It became a daily part of life for many workers as companies faced forced slowdowns. At the peak of the crisis, roughly 3.4 million workers across Spain were affected.
Deferrals allowed firms to pause some payments, transferring a portion of the burden onto public funding. The state has invested more than 30 billion euros in postponements and support for the self-employed. Initial criticisms from those affected cited delays and payment issues, but the program ultimately helped stabilize the economy as restrictions eased.
Today, the total remains around 15,379 workers affected, mostly in vehicle manufacturing related to the chip shortage and in hospitality sectors that have not fully reopened since Covid.
Self-employed: Almost 100,000 more self-employed workers
Self-employment proved resilient during the crisis, losing far fewer participants than other sectors. Support measures, including a pause in activity, helped sustain many who chose to stay in business. As of March, there are about 100,000 more self-employed workers than three years ago, bringing total participation close to 3.3 million.
The main challenge now is adapting to the new quota system amid rising inflation. Since the current year began, self-employed contributors are paid according to net income, leading some to opt out when they cannot meet the minimum payments. The early 2023 period has been challenging for this group, reflecting negative growth year over year.
In sum, Spain’s labor market has shown notable resilience, with substantial job gains and a significant reduction in unemployment from the pandemic peak. Ongoing reforms and economic conditions will shape how quickly the recovery solidifies and how flexible the system remains in the face of future shocks. Attribution: national labor statistics and policy briefings.