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WORKING IN SPAIN

Spain has fewest job vacancies in EU despite worker shortage

New data from the European Commission has revealed that Spain is one of the countries with the fewest available jobs in the EU, even though many companies complain that they are unable to fill their vacancies.

Published: 22 August 2023 16:48 CEST
Spain has fewest job vacancies in EU despite worker shortage
Spain has fewest job vacancies in EU despite worker shortage. Photo: JAIME REINA / AFP

Spain historically has always had a high unemployment rate and today’s figures are no different, standing at 11.7 percent in the second quarter of 2023, making it one of the highest in the EU.

But new data released by Eurostat, the statistical service for the European Commission, reveals that part of the reason for this might be the fact that Spain has very few job vacancies. In fact, the proportion of jobs available in Spain is below one percent.

This means that out of every 100 jobs that exist, less than one has yet to be filled.

According to this latest update from Eurostat the number of vacancies stands at 0.9 percent in the second quarter of 2023, although this number has not changed since the beginning of 2022.

Looking at all the data, it has been revealed that Spain is one of the countries that has the least number of available jobs in the EU.  

The Netherlands has a job vacancy rate of 4.7 percent, Germany with 4.1 percent, Slovenia with 2.9 percent and Italy with 2.2.

Eurostat so far only has data available for six countries in the second quarter of 2023, but looking at data from the first quarter, only Bulgaria, Poland and Romania had vacancy rates around the same as Spain.  

The statistics also include an estimate of the average European Union rate, which Eurostat put at 2.8 percent and the Eurozone rate at 3 percent, meaning Spain is well below the average.  

These latest findings are in direct contradiction to what both companies in the hospitality and tech industries have been saying in Spain. Many have been complaining that they are having problems finding workers to fill their vacancies.  

In May of this year, we reported that Spanish companies were being forced to look abroad and recruit migrant workers to fill hundreds of thousands of job vacancies. At that time, a third of Spanish companies reported that they were having difficulties finding workers, a figure that rose to 50 percent in the hotel, catering and construction industries.

Spain’s Ministry of Labour agrees with the Eurostat data and insists that the country doesn’t have a problem with large numbers of unfilled jobs, despite complaints from employers.

“There are very few compared to the employed. It is not statistically true that companies have difficulties covering employment needs”, sources from the ministry told the national newspaper El País.  

“Our rate (0.9 percent) is so low because, unfortunately, our unemployment data is very high (11.7 percent, compared to the European average of 5.9 percent),” they explained.

The Eurostat report explained that vacancy statistics provide information about the level and structure of labour demand. The vacancy rate can reflect both unmet demand for labour and potential mismatches between the skills and availability of those in unemployment and what employers are looking for.

These statistics are used by the European Commission and the European Central Bank (ECB) to analyse the evolution of the labour market at both a national and a European level. “They are also a key indicator used for an assessment of the business cycle and for a structural analysis of the economy,” the report stated.

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AMERICANS IN SPAIN

EXCLUSIVE: What the new Spain-US social security deal means for Americans

The Local speaks to the Spanish government and tax experts to understand what the new social security and pensions agreement between the United States and Spain means for American workers, digital nomads and pensioners in Spain.

Published: 15 May 2024 11:10 CEST
EXCLUSIVE: What the new Spain-US social security deal means for Americans

In early April, the United States and Spain announced a new social security and pension agreement.

The first update to the bilateral agreement between the two countries since 1986 was announced by US Ambassador to Spain, Julissa Reynoso, and Spain’s Minister of Inclusion, Social Security, and Migration, Elma Saiz.

The official agreement is unpublished so The Local spoke with a representative from Spain’s Ministry of Inclusion, Social Security, and Migration as well as international tax experts to understand the agreement in more detail.

Key aspects of the agreement

The Ministry told The Local Spain that the agreement is a step towards, bolstering mobility between Spain and the United States by improving pension calculations and social security protections.

The agreement has to do with the accumulation of benefits and affects working Americans living in Spain. There are two main components; the first affects which system people pay into (Spanish or American) and the second maximises the amount people can collect from social security.
 
Regarding paying into social security, the new agreement extends the “posting period” from three years to five years, with the possibility of extending it to seven years.

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This is meaningful for US employees who are working in Spain and means that they can now pay into the US social security system, rather than the Spanish social security system for longer.

Whereas the employee contributions in Spain and the United States are similar, 6.4 percent in Spain and 6.2 percent in the United States, the rate that employers pay differs greatly. In the United States the employer pays 6.2 percent into social security, whereas in Spain they pay 31 percent.
 
Why does this matter? “Previously when Americans moved to Spain, US employers were cutting the amount that they paid in salary because the cost of employment went up so much”, Louis Williams, Co-Founder and CEO of Entre Trámites, told The Local Spain.

It’s also made employers hesitant to grant digital nomads an Employer of Record (EOR) which would allow American workers to be on a Spanish contract.

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In terms of collecting benefits, the representative from Spain’s Ministry of Inclusion, Social Security, and Migration says, “In the calculation of the Spanish pension there have been technical modifications that will benefit especially those people who developed their last working life in the United States, without this harming those who have worked in Spain immediately before requesting the benefit.”

In other words, under the new agreement, after calculating a person’s benefits under each country’s system, the recipient will be awarded the most beneficial of those two calculations.

Impacts for self-employed workers and digital nomads

According to the Ministry, “The agreement allows self-employed workers to temporarily move to the other State while maintaining their legislation, a possibility that was previously restricted only to employed workers.”
 
This has big implications for people who avoid moving to Spain because of the complicated social security contributions scheme, as they’ll now be able to continue paying US social security taxes (rather than Spanish) for up to seven years.
 
“The interesting thing is if this is extended to digital nomads because it would make the digital nomad visa more attractive,” says Williams.

“Why? Because if you’re posted by an employer (who can now avoid high Spanish social security taxes) you’re eligible for Beckham’s Law.” The law, which does not extend to autonomous works, can cap tax liabilities at 24 percent.
 
Being posted could make life much simpler, according to Elliott Locke, ACSI, co-founder of abroaden, a financial wellbeing and education start-up for people living abroad headquartered in Barcelona.

“The calculus is harder for freelancers given the different legal structures and methods for freelancing between the two countries. In many ways, if an American moves here to work remotely, it could be beneficial for them to have their US-based employer hire them on a local contract through an employer-of-record,” Locke told The Local.
 
In short, the new agreement could make it more attractive for U.S. companies to post employees in Spain, making them eligible for Beckham’s law and allowing autonomous workers to pay into the U.S. social security system, making it more beneficial and easier to be a digital nomad in Spain.

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Who benefits from the new agreement?
 
The people who will feel this new agreement the most are employers, digital nomads, retirees who have paid into both systems over the years, and finally, civil servants. “Spain has incorporated as possible beneficiaries of the Agreement those people who have contributed to the civil servant’s regime (passive class regime), who were excluded in the previous Agreement,” says the Ministry.
 
When can we expect the new agreement to come into force?

Don’t hold your breath; this is Spain after all, but we can expect the agreement to come into force within the next two years.

The deal has to pass through Congress before approval, which is likely why it has not yet been published. If things move quickly, people could expect to benefit within a year.

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