Spain's labour market suffers worst first quarter since Covid-19 pandemic, raising unemployment to 10.8%

Employment

The EPA workforce survey recorded 231,500 more unemployed between January and March, although total employment remains at record highs

José A. González

The unemployment rate in Spain rose above 10% again at the end of the first quarter of 2026, reaching 10.83%, compared to 9.93% at the end of 2025. According to data from the EPA workforce survey, 231,500 more people became unemployed between January and March, which is a 9.3% increase compared to the previous quarter, bringing the total to 2,708,600. At the same time, Spain lost 170,300 jobs and the number of employed individuals fell to 22,293,000.

This increase in unemployment represents the largest jump in a first quarter since 2013 and returns Spain to the psychological barrier of 10% unemployment, which it had managed to break below by the end of 2025 for the first time in 17 years. However, despite the quarterly deterioration, it is also the lowest unemployment rate recorded at the start of a year since 2008, reflecting the accumulated strength of the labour market in recent years.

These most recent figures represent a significant setback for the Spanish labour market and reflect a more negative trend than that observed in previous years. Job losses at the start of this year were almost double those recorded in the same period in 2025, which lost 92,500 jobs compared to the current 170,300. Furthermore, this is the worst figure for a first quarter since 2020, when the outbreak of the Covid-19 pandemic caused a sharp decline in employment.

Despite this decline, the total number of employed people remains at record levels for the start of the year. A total of 22,293,000 people are still working in Spain, representing a 2.42% increase compared to a year ago and confirming the all-time high for a first quarter. In seasonally adjusted terms, that is, without taking into account the calendar effect, employment even exceeds 22.5 million workers, reflecting an increase of 96,800 people compared to the previous quarter.

Furthermore, the labour force remains at record highs, exceeding 25 million people for the first time, a factor that also helps explain the rise in unemployment. In the last year, the labour force grew by 447,000 people, while unemployment fell by 80,600 and more than 527,000 jobs were created.

Following this poor start to the year, it's worth noting that the first quarter is traditionally the weakest for employment in Spain. The end of the Christmas season particularly impacts sectors like hospitality and retail, where temporary hiring drops significantly. To this, statistics must add the low tourist season and the storms in January and February, which hampered activity in the hospitality sector. Conversely, Easter falling at the end of March may have partially mitigated this decline thanks to some early hiring.

The decline in employment happened mainly in the private sector, with 191,400 fewer people working, while public sector employment increased by 21,100. By sector, the largest drop occurred in services, with 228,400 fewer jobs, while industry, construction and agriculture saw moderate gains.

Geopolitical tensions in the Middle East and international uncertainty have compounded this usual seasonality with rising fuel prices and fears about their impact on inflation and tourism. While some of the decline is due to cyclical factors, the data also points to a slowdown beyond the typical year. Seasonally adjusted job growth was half that of last year, suggesting a loss of momentum in the labour market at the start of 2026.

Generally more stable labour market

The situation is also improving for many households. The number of those with all working-age members employed has increased by 263,200 over the past year, reaching 12,045,000, while those with all working-age members unemployed has decreased by 32,200. This is in addition to the growth in full-time employment, with 567,600 more people in the last 12 months, and the increase in permanent contracts, which now exceed 16.2 million. Furthermore, temporary employment keeps declining and stands at 14.77%, with an even lower figure in the private sector.

The quarterly adjustment was again primarily in temporary employment. The number of salaried workers fell by 102,900, of them 85,400 with temporary contracts compared to only 17,600 with permanent contracts. This consolidates the trend towards greater stability in the labour market that began with the reform and consolidates the growing importance of permanent employment.

Advances in the healthcare labour market

The rise in employment is particularly noticeable in sectors with higher added value. Healthcare and social services added 72,100 jobs over the past year, education added 45,500 worker and arts and recreation activities grew by 38,900. The performance of the financial and insurance sector also stands out, with 47,800 new jobs, confirming that some job growth is based on sectors with greater stability and higher skill levels.

The government states that these figures reflect the fundamental strength of the labour market despite the economic downturn in the first quarter. Minister of Economy Carlos Cuerpo says that "the data confirms a labour market capable of creating higher-quality jobs even in an uncertain international context". He also says that the new record high in seasonally adjusted employment demonstrates that "Spain is facing current challenges better prepared than in previous crises".

The coming quarters will show whether this slowdown is solely due to temporary factors or it anticipates a more structural change in trend due to the international energy crisis and the advance of artificial intelligence.