Jobs: the labour reform, three years on
The labour reform of December 2021 changed employment contracts. Since then, temporary employees in the private sector have gone from 23.7% to 12.4%. Part of that change has gone into permanent seasonal contracts, and youth unemployment is still among the highest in the EU.
Spain and Europe
Spain is no longer an exception on temporary work. On youth unemployment, not yet.
Jobs will be one of the issues of the 29 November campaign, and the 2021 labour reform is the most important change to employment contracts in recent years. Its main aim was to reduce temporary employment, one of the features that most set the Spanish labour market apart from the rest of Europe.
In 2021, 25.4% of Spanish employees aged 15 to 64 had a temporary contract, the second highest share in the EU, behind only the Netherlands. In 2025 it was 15.4%. The European average also fell, but much less: from 14.0% to 12.6%. The gap with the EU has narrowed from 11.4 to 2.8 points. Spain is now third, behind the Netherlands (25.5%) and Poland (15.7%), and almost level with France and Portugal (15.2%).
Temporary employees fall from 25.4% to 15.4% in Spain between 2021 and 2025; in the EU, from 14.0% to 12.6%
Employees on temporary contracts, aged 15 to 64, 2025, as % of employees. In 2021 Spain had the 2nd highest share of 27 countries; now, the 3rd
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Youth unemployment has also fallen, but it is still far from the average. In 2021, 35.0% of under-25s who wanted to work could not find a job; in 2025, 24.9%. In the EU, 15.2%. Spain has the second highest rate of the 26 countries with data, after Romania (26.1%). Greece, which had a similar rate in 2021 (35.5%), has fallen to 19.1%, and Italy from 29.7% to 20.6%.
Unemployment among under-25s falls from 35.0% to 24.9% between 2021 and 2025; in the EU it is 15.2%
Unemployment rate aged 15 to 24, 2025, as % of the labour force of that age. Spain is the 2nd highest of 26 countries
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Spain from within
Temporary employment has fallen in every region, and most where it was highest.
In the private sector, the share of employees on temporary contracts has fallen in all 17 regions between 2021 and the last year (from the third quarter of 2025 to the second of 2026). The largest falls are, in general, where temporary employment was highest: Andalusia (from 35.3% to 18.1%), Extremadura (15.4 points lower), Murcia (15.1) and the Canary Islands (14.1). The smallest, in Navarre (6.4 points) and the Basque Country (6.8).
The differences have narrowed, but they are still there. Andalusia (18.1%), Extremadura (17.2%) and Murcia (15.2%) have the highest shares; Madrid (9.3%), Catalonia (10.2%) and Galicia (10.3%), the lowest.
In the private sector, the temporary employment rate has fallen since 2021 in all 17 regions: it now ranges from 9.3% in Madrid to 18.1% in Andalusia
Private-sector employees on temporary contracts, average of the four quarters from Q3 2025 to Q2 2026, in %. Spain: 12.4% (23.7% in 2021)
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The other persistent problem is long-term unemployment. In the last year, 35.4% of the unemployed had been looking for work for a year or more, against 47.8% in 2021, when pandemic lay-offs still weighed heavily. The Canary Islands (45.2%) and Castile-La Mancha (40.6%) have the highest shares. The Balearic Islands, at 19.3%, have the lowest, and also the largest fall since 2021 (24.7 points).
35.4% of the unemployed have been looking for work for a year or more: from 19.3% in Balearic Islands to 45.2% in Canary Islands
Unemployed people looking for work for a year or more, average of the four quarters from Q3 2025 to Q2 2026, as % of the unemployed. Spain: 47.8% in 2021
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Spain over time
Temporary employment in the private sector is at its lowest level since at least 2008. In the public sector it has fallen much less.
Policy file: the 2021 labour reform
- What it is. Royal Decree-law 32/2021 of 28 December, agreed by the government with the trade unions and employers' organisations. It abolished the project-based contract (obra y servicio), limited temporary contracts to specific, short-term causes, tightened the rules on chaining contracts and widened the use of the permanent seasonal contract (fijo discontinuo).
- When. It came into force on 31 December 2021, but the contract changes have applied since 30 March 2022.
- What should happen. Fewer temporary contracts and more stable jobs. The risk its critics pointed to was that temporary contracts would turn into permanent ones that were just as unstable, especially permanent seasonal ones.
- What we compare it with. With the public sector, which mostly hires under its own rules. It is not a perfect comparison: Law 20/2021 to reduce temporary employment among interim staff was passed at the same time.
Between 2008 and 2021, temporary employment in the private sector rose and fell with the cycle, but it did not drop below 21% in any quarter. In 2021, the average was 23.7%. Since the new contracts have applied it has fallen quickly, and in the last year it was 12.4%, the lowest level in the series, which starts in 2008. In the public sector, temporary employment kept rising to over 32% in the year ending in the second quarter of 2022, and has since fallen to 27.0%, a level similar to 2019. Between 2021 and the last year, temporary employment has fallen 11.3 points in the private sector and 4.2 in the public sector.
Between 2021 and the last year, the private sector's temporary employment rate falls from 23.7% to 12.4%; in the public sector, from 31.2% to 27.0%
Employees on temporary contracts, as % of each sector's employees, quarterly from 2008 to Q2 2026
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Part of the change has gone into permanent seasonal contracts (fijos discontinuos), a permanent contract for seasonal or intermittent work in which no wage is paid between one period of activity and the next. They were 2.5% of private-sector employees in 2021 and 4.1% in the last year. If they are added to temporary workers, the share falls from 26.2% to 16.5%: almost 10 points, less than temporary employment alone, but still a big drop.
Permanent seasonal workers rise from 2.5% to 4.1% of private employees; added to temporary workers, they fall from 26.2% to 16.5%
Private-sector employees on temporary or permanent seasonal contracts, in %, quarterly from 2008 to Q2 2026
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What the independent evaluations say. The Bank of Spain (Annual Report 2023) concluded that job stability as a whole had increased slightly, because permanent contracts weigh much more, although new permanent contracts, and especially permanent seasonal ones, last somewhat less than before. Of the contracts signed in March 2022, 16.1% were still active a year later, against 11% of those signed in March 2017 and 2018. It warns that the comparison is not causal.
AIReF, Spain's independent fiscal authority (technical paper, September 2025), compares the sectors and occupations most exposed to temporary employment with the rest. It finds that the reform slightly reduced the probability of losing a job and somewhat improved the probability of finding one, and that it increased the shift from temporary to permanent seasonal contracts, but it finds no clear effect on the shift to ordinary permanent contracts or on total job growth. It urges caution: these are average effects, over a few years and with many other changes at the same time.
In short: temporary employment has fallen much more in the private sector than in the public sector and than in Europe, and both evaluations link that fall to the reform. What is still under debate is how much more stable the jobs that replaced it are.
What this data does not say. The EPA (Labour Force Survey) is a survey of people, not a register of contracts: it says how many employees have a temporary contract, but not how many contracts are signed or how long they last. That requires Social Security registration records, which are what the Bank of Spain and AIReF use. The public sector is not a perfect comparison group, because it had its own law against temporary employment at the same time. And the youth unemployment rate is calculated over young people looking for work, not all of them: many under-25s are studying and do not count as active.
See also: Note: real wages and the minimum wage since 2008
See also: The parliament in data: unemployment, growth and the employment rate since 2023
Sources for the text
- BOE (official gazette): Royal Decree-law 32/2021 on urgent measures for labour reform
- BOE: Law 20/2021 on urgent measures to reduce temporary employment in the public sector
- AIReF: Technical paper on the labour market and the impact of the reform measures (DT 8/25)
- Bank of Spain: Annual Report 2023, chapter 3 (box 3.1)
Notes on this theme
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