Spain has seen unemployment fall below 10% in 18 years.

Spain ended 2025 with its unemployment rate below 10% for the first time since 2008, marking a major milestone in the country’s long‑running struggle with high joblessness. The latest figures released by the Instituto Nacional de Empleo (INE) or National Employment Institute show the jobless rate stood at 9.93% in the final quarter of 2025, a significant drop from 10.45% three months earlier and the lowest level in nearly 18 years.

The decline in unemployment is due to a strong year of job creation, and the sustained economic momentum that has been achieved by Spain. Over 605,400 new positions have been created throughout the Spanish economy. By the end the year, total employment had reached a record level of 22,46 million people.

Economists and policymakers welcomed the figures as evidence that structural reforms and private‑sector expansion are delivering results. Many of the new jobs were in the private sector, which accounted for around 92% of employment gains during 2025, a sign of broad‑based labour demand.

Drivers of employment growth

The strong performance of the Spanish labour market in 2025 was due to a number of factors. Growth in services, manufacturing and construction sectors drove hiring throughout the year, with full‑time and indefinite contracts rising notably. Officials from the government cited strong demand for goods and services, investment in digital and green industries and tourism activity as major contributors.

Economy Minister Carlos Cuerpo described the data as evidence of “a stronger, more stable jobs market with higher‑quality employment,” highlighting the increasing share of full-time and permanent positions compared with temporary work. The increase in permanent roles and the evolution of contracting was seen as a better indicator of job quality than simple job numbers.

Private‑sector dynamism was central to this trend. Small and medium‑sized enterprises, in particular, expanded their workforce to meet rising demand, while multinational companies continued to scale up operations in key Spanish regions. Tourism and hospitality, following a strong summer season, contributed to the growth of labour force.

Regional and Demographic Patterns

The improvements in the labour market were evident across Spain, but with some notable regional differences. Some autonomous communities saw a sharper drop in unemployment than other. For instance, some regions experienced a sharp decline in unemployment, whereas rural areas continue to face uneven conditions on the labour market, with limited economic activity.

The youth unemployment rate, although still significantly higher than national average, has been on a downward trend. The unemployment rate among workers aged under 25 is around 23 percent, which is the lowest level since the global economic crisis.

Wider Economic Context

The decline in unemployment was accompanied by a steady economic growth. Spain’s GDP expanded at a steady pace through 2025. Domestic consumption, investments and exports were the main drivers. This backdrop has helped to sustain the demand for labor and offset pressures due to global inflationary risks.

Despite the positive figures, analysts caution that long‑term structural challenges persist. Policy priorities include the mismatch of skills, regional disparities, and the need for improved productivity. The affordability of housing, especially in large urban areas, continues as a barrier to labour mobility for many.

Migration is also a factor which influences employment trends. Spain’s relatively open labour market and demographic trends have seen an increase in the participation of foreign‑born workers, which has helped meet labour demand in certain sectors. The labour market reform should prioritize integration and ensuring that all residents have equal access to high-quality jobs.

Reactions to Politics and Policy

The government has marked the milestone of unemployment as a key achievement in its economic agenda. Prime Minister Pedro Sánchez said the data demonstrated the effectiveness of job creation policies and labour market reforms implemented in recent years. He highlighted that the combination of private investment and public initiatives is critical to sustaining employment growth.

The opposition parties recognized the improvements but stressed that it was still necessary to tackle persistent problems, such as the high rate of youth unemployment and the precarious conditions in certain sectors. They called on targeted strategies for enhancing training, lifelong-learning opportunities and better aligning of education with the labour market.

Perspective for 2026

Economists predict that Spain’s labor market will continue to grow in 2026, if demand and investment remain strong. The modest wage growth will likely contribute to higher spending by consumers, which in turn could lead to more job creation. External risks such as global slowdowns or disruptions in supply chains could dampen the optimism.

Experts agree that to keep unemployment under 10%, concerted effort will be required to improve the quality of employment, address regional imbalances, and support vulnerable group. In order to shape the future of Spain’s labour market, it is important that we continue to focus on innovation, digitalization and sustainable economic sectors.