Spain’s labour market contracts sharply in August

Spain’s post-summer slowdown hit hard this year, with August bringing one of the sharpest contractions in employment since the financial crisis. Figures from the Ministry of Inclusion and Social Security show that the country shed 199,300 jobs—its steepest August decline since 2019 and the third worst in nearly two decades.

The decline was largely fuelled by the mass expiry of temporary contracts in tourism and hospitality. Hotels, restaurants, and resorts had hired heavily to meet peak summer demand, but as visitors thinned out in late August, thousands of positions disappeared almost overnight.

New contracts at record lows

Recruitment slowed to a crawl. Just over 1.04 million new contracts were signed, down by more than a third on July. Permanent contracts took the biggest hit, dropping almost 37%. Of these, fewer than half were full-time. The rest were split between part-time positions and Spain’s widely used “fijo discontinuo” contracts, which link workers to an employer but only for intermittent periods.

Official jobless rate masks reality

Registered unemployment inched up by 21,905 people to 2.42 million. That figure, the lowest for an August since 2007, might suggest resilience. Yet the broader measure of “effective unemployment” paints a different picture. Including those with suspended contracts or temporarily laid off under ERTE schemes, Spain had 3.24 million people out of work in August—over 830,000 more than the official tally.

Young workers hardest hit

Under-25s bore the brunt of the downturn. They accounted for 40% of the job losses, with 3,485 more young people joining the unemployment rolls. Their heavy reliance on seasonal tourism roles leaves them especially exposed once summer ends.

Longer-term picture still positive

Despite August’s grim snapshot, Spain’s employment base remains historically strong. The country still counts more than 21.6 million workers, nearly half a million more than a year ago. Economists point out that while seasonal turbulence is inevitable, the underlying trend continues to be one of gradual growth.