23rd June 2024
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More optimism for Spain’s economic recovery, as unemployment continues to fall

There is continued optimism about economic recovery in Spain, as data released this week confirmed that the unemployment rate fell to 15.3% in the second quarter of 2021, from 15.98% in the previous quarter.

The unemployment rate recorded in the fourth quarter of 2019, before the pandemic hit, was 13.78%, clearly showing the impact of the economic challenges over the last 18 months.

The government is forecasting that the unemployment rate will continue to fall to a level of around 15% at the end of 2021, falling further to 14% in 2022.

The numbers of unemployed continue to fall each month and in July the decrease of 197,841 was the highest monthly decline since records began.

There is still a significant difference in unemployment figures compared to the pre-pandemic period of 2019. The total number of unemployed at the end of July stands at 3.4 million, compared to around 3 million in July 2019.

The numbers included in the data released this week do not include the workers who were put onto the government supported ERTE furlough scheme at the beginning of the pandemic. In recent weeks, many of these workers have been returning to work but some industries are still suffering the effects of depressed activity, in particular the tourism and hospitality sectors.

When the scheme does end, there is a concern that unemployment will rise as some of these workers have contracts terminated.

The sectors that appear to be performing well and creating jobs include the service sector, where unemployment fell by 133,658 during the second quarter.

The regions that were seeing the largest decline in unemployment levels were Andalusia, Catalonia and the Canary Islands.

Archive image of office in Barcelona.
Archive image of office in Barcelona. (Vicente Zambrano González)

The figures indicate that women are being impacted the most by the impact of the pandemic on unemployment, representing 60% of the unemployed total in July. This is thought to be due to the hospitality sector remaining depressed and being a sector that has historically employed more women.

Speaking about the data after meeting with king Felipe VI on Tuesday in Mallorca, Prime Minister Pedro Sánchez said that the encouraging signs of economic recovery were very different to last year, stating that ‘Spain is heading directly towards economic recovery, which will be significant throughout 2021 and 2022’.

Referring to the improvement in unemployment data as ‘extraordinary’, he highlighted the importance of using the EU Recovery Funding effectively across all regions of Spain, and that it was an opportunity to change the economic modelling of the country to ‘do things better than before Covid’.

The economic recovery plan includes a focus on boosting sectors such as technology, digitalisation and green energy, with the aim of strengthening the resolve of the Spanish economy and placing less reliance on the tourism sector.

The next quarter is key to the tourist sector, that is concerned about the return of international tourism to pre-pandemic levels. With on-going restrictions and guidance in countries that have historically visited Spain in large numbers, it is looking increasingly likely that the sector will continue to face challenges and not return to pre-pandemic levels until next year.

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