Spain has achieved a milestone not seen since the global financial crisis: unemployment fell below 10% in 2025 after the economy created 605,000 jobs, marking the country's emergence from two decades of labor market dysfunction.
The unemployment rate reached 9.8% at year-end, according to El País, the first time since 2008 - before Lehman Brothers collapsed - that Spanish joblessness dipped to single digits. For a country where youth unemployment exceeded 50% during the euro crisis, the transformation is profound.
Brussels decides more than you think - but Madrid deserves credit for this one.
The Spanish economy added over 600,000 jobs across 2025, driven by tourism recovery, renewable energy investment, and reforms to labor contracts that reduced the prevalence of temporary work. The services sector - hospitality, retail, healthcare - accounted for the bulk of job creation, while construction and green energy projects provided additional growth.
For context: when Spain entered the eurozone crisis in 2010, unemployment reached 26% as austerity measures gutted public sector jobs and credit contraction killed private hiring. An entire generation of Spanish graduates - the generación perdida (lost generation) - emigrated to Germany, Britain, and Latin America because their own country couldn't employ them.
The turnaround reflects structural reforms implemented after the crisis, including 2021 labor law changes negotiated between the Socialist government, unions, and employers. Those reforms reduced reliance on temporary contracts - which made Spanish workers easy to fire - while maintaining flexibility that businesses demanded.
The shift to more permanent contracts matters. Spain historically had Europe's highest rate of temporary employment, with workers cycling through short-term jobs that provided no security or career progression. The new framework incentivizes longer-term employment while allowing legitimate temporary work in seasonal industries like tourism and agriculture.
Tourism's full recovery from COVID lockdowns boosted the services sector, which employs nearly three-quarters of Spanish workers. The country welcomed a record 89 million international visitors in 2025, surpassing pre-pandemic levels and generating jobs from Barcelona hotels to Málaga restaurants.
Renewable energy investment - driven by both EU climate funds and private capital betting on Spanish sun and wind - created construction and engineering jobs. Spain aims to generate 80% of electricity from renewables by 2030, requiring massive infrastructure build-out.
The milestone offers political vindication for Prime Minister Pedro Sánchez, whose minority Socialist government has survived despite lacking a parliamentary majority. Opposition conservatives spent years claiming labor reforms would destroy employment; instead, Spain created jobs faster than most EU neighbors.
Caveats remain. Regional disparities persist - Andalusia and Extremadura still face double-digit unemployment. Youth joblessness, while improved, remains elevated. And wage growth has lagged inflation, meaning many Spanish workers earn less in real terms despite having jobs.
But for a country that spent a generation as Europe's unemployment basket case - the place Germans pointed to when explaining why Mediterranean countries needed "structural reform" - falling below 10% represents a psychological breakthrough as much as an economic one.
Brussels decides more than you think - but sometimes, getting the fundamentals right at home matters more than what Brussels thinks. Spain reformed its labor market, invested in growth sectors, and created jobs. Revolutionary concept: it worked.
