Thursday, 10 July 2025, 16:18
The Organisation for Economic Co-operation and Development (OECD) has issued a warning about the future of Spain’s labour market. It is not just about the employment rate, but also about the risk of not finding enough workers to fill the necessary positions due to Spain’s aging population, which could lead to a collapse in productivity and the national economy. Currently, one in every two employed workers in Spain is over 45 years old, while only one in ten is under 30. Projections for when we hit the mid-century suggest sustained growth in the over-50 population and a shortage of young people, which jeopardises generational renewal. The solution? “Encourage the participation of older workers in good health to stay on and encourage regular migration.”
The OECD is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate economic progress and world trade.
These are two of the recommendations included in the OECD Employment Outlook 2025 report published this Wednesday. Currently, the average real retirement age in Spain – according to data from the Ministry of Inclusion, Social Security and Migration – is 65.2 years, still below the 66.8 years set by law for 2025 for those with short contribution careers. If currently under-utilised labour resources are not mobilised, the OECD warns that the Spanish economy could slip into recession in the coming years. Its calculations predict that GDP per capita will increase by just 0.13% per year until 2060, compared to 0.53% recorded between 2006 and 2019.
The OECD points out that the “demographic winter” is a global phenomenon, a consequence of longer life expectancy – often accompanied by poorer health – and a prolonged decline in the birth rate. In Spain, this problem is exacerbated by an expected 30% reduction in the working-age population. Furthermore, the employment rate is estimated to fall by 10.3 percentage points, more than double the expected average for developed countries. “The consequence is that the number of older people per working-age person will rise sharply from 0.34 in 2023 to 0.75 in 2060,” states the report.
So, the Organisation for Economic Co-operation and Development is urging Spain to implement urgent measures to prevent the deterioration of a labour market that, while showing signs of recovery, continues to lead the unemployment rate in this part of the world. “Spain continues to have the highest unemployment rate in the OECD, more than double the average,” the report notes. Even so, the organisation’s projections point to an unemployment rate of 10.7% by the end of 2025, and 10.1% in 2026. This decline would be underpinned by strong domestic demand, albeit threatened by the demographic challenge.
Kickstarter incentives
One day before the report’s publication, the Secretary of State for Social Security, Borja Suárez, acknowledged that the Spanish government is working on a plan to encourage retired people to return to the labour market. “It was already on the table at the Ministry of Social Security,” she said, noting that the programme has now been renamed “reversible”, (‘going back’).
At the round table session for pension discussions held on 16 June, the government presented a proposal to reform the flexible retirement model. This measure envisages extending the range of permitted part-time working to between 40% and 80%, in exchange for a pension supplement ranging from 10% to 20%. The possibility of self-employed workers being able to benefit from this option was also raised.
Flexible retirement allows employees who have already retired to combine collecting their pension with part-time employment. Under this scheme, the worker can return to some employment, but their pension will be adjusted in proportion to the reduction in their working hours compared to those of a full-time employee in the same company, with the same type of contract and in an equivalent position. If such a comparison is not possible, the adjustment will be made according to the working hours stipulated in the applicable collective bargaining agreement or, failing that, based on the maximum legal working hours.
Wages are not recovering
In most OECD countries, real wages are growing, although in half of them they have yet to reach the levels seen before the inflationary surge caused by the pandemic, namely those of early 2021.
In Spain, however, while unemployment has fallen significantly in recent years, wages have failed to keep pace with inflation. While nominal wages increased markedly in 2023 and 2024, real wages in the first quarter of 2025 were still 4.2% below the level recorded in the same period of 2021. This trend puts Spain in line with the eurozone average, but behind most major OECD economies. Only Australia and Italy have suffered more severe declines in real wages over the same period.
However, as has been the case in other OECD countries, lower-income workers in Spain have been relatively protected from the impact of post-pandemic inflation. By April 2025, the minimum wage in real terms had increased by 3.1% compared to January 2021. Even though this growth is lower than the OECD average (7.9%), the Spanish minimum wage still represents more than 60% of the median net wage. It should be noted that the statutory minimum wage in Spain is set annually by central government, following consultations with trade unions and employers’ organisations, although these consultations are not binding.