Else Beekman
Spain risks a severe decline in its workforce by 2060 due to an ageing population, potentially pushing the economy into recession if older workers are not engaged and regular migration is not encouraged.
Spain’s workforce is projected to shrink by 30% by 2060. At present, half of Spain’s employees are over 45, while fewer than one in ten are under 30. As more people pass the age of 50, replacing them will grow more difficult. The OECD recommends that Spain adopt measures to help healthy older people remain in the workforce and to ease legal migration rules.
According to the Ministry of Social Security, most workers currently retire at 65.2 years, which is still below the legal retirement age of 66.8 set for 2025. If the country fails to act, GDP per capita could grow by only 0.13% per year until 2060, compared to the 0.53% seen between 2006 and 2019.
‘Demographic winter’ is coming
This trend forms part of what experts call a “demographic winter,” marked by falling birth rates and rising life expectancy. Spain faces these challenges more acutely than many countries. Employment rates may decline by more than 10 percentage points, and the ratio of elderly people to workers could more than double.
Falling unemployment rates
Spain continues to record the highest unemployment rate in the OECD, which stands at over twice the organisation’s average. Even so, forecasts suggest that unemployment could fall to 10.7% by the end of 2025 and to 10.1% in 2026.
‘Reversible’ scheme proposed
The government has announced plans for a new “reversible” scheme. Herewith they want to encourage pensioners to return to part-time work with a pension supplement. Flexible retirement arrangements allow pensioners to combine part-time jobs with their pensions, with payments adjusted proportionally.
Although fewer people are unemployed, wages have not kept up with rising prices. Real pay remains 4.2% below 2021 levels, trailing most major OECD economies. However, Spain’s minimum wage has increased by 3.1% since 2021, providing some protection for the lowest-paid workers.
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