MADRID, Jan 27 (Reuters) - Spain's unemployment rate fell to its lowest in 18 years in the fourth quarter of 2025, according to data released on Tuesday, as growth in services jobs and permanent contracts showed early signs of stabilising one of Europe's weakest labour markets.
The country's jobless rate, at 9.93% last quarter, is the lowest since the 2008 financial crisis that hit Spain particularly hard, but remains among the highest in the European Union.
Youth unemployment, though also at its lowest
since the crisis, remains stubbornly high at 23%, data showed.
Still, Spain's strong economic growth and a 2021 labour reform limiting the extent to which companies could hire workers on temporary contracts were beginning to chart a pathway towards consistently higher employment, economists said.
Its openness to immigration was also a factor in plugging holes in key sectors for job creation, they added.
"Immigration sets us apart from other countries," said Raymond Torres of think tank FUNCAS. "It has dynamised growth in sectors like hospitality and care which otherwise would have encountered labour shortages."
MORE MIGRANTS, MORE FULL-TIME WORKERS
Spain's Socialist government has advocated for integrating migrants into the labour market to bolster the welfare state and growth, setting it apart from other European countries tightening their borders.
The government struck a deal on Monday with hard-left party Podemos, set to be passed by the cabinet in coming weeks, to expedite legal status for roughly 500,000 irregular migrant workers who have lived in Spain for five years with no criminal record.
The country created the largest number of jobs across the euro zone at 605,400 in 2025, 92% of which were in the private sector, according to government figures. It added 574,700 full-time jobs and 30,700 part-time positions.
Sustaining the trend will require creating better job prospects for young people, boosting construction to tackle the housing crisis and attracting further private investment, Torres said.
(Reporting by Victoria Waldersee, Mireia Merino, Editing by David Latona, Charlie Devereux and Sharon Singleton)
