The ‘Big Quit’ hits Spain despite high unemployment and huge job vacancies

The phenomenon sweeping across the US, where millions have quit their jobs during the pandemic, has now arrived in Spain, despite an unemployment rate of 13.5 percent and 109,000 job vacancies.

Waiter in Barcelona, Spain
Is the great resignation coming to Spain? Photo: LLUIS GENE / AFP

The ‘Great Resignation’ trend, also known as the ‘Big Quit’, began at the beginning of 2021 in the United States, when large numbers of people decided to quit their jobs in order to seek better opportunities, quality of life or pay, often without having a new position lined up beforehand. 

Now, the phenomenon has found its way to Spain, despite the chronically high unemployment rate here (currently 13.5 percent) that’s plagued the country for years.

While the numbers of people voluntarily quitting their jobs in Spain are still far below the likes of the US and Italy, the Spanish government is starting to worry as 109,000 job vacancies remain unfilled.

In the US, so far a whopping 50 million have quit their jobs since the start of 2021 and in Italy, it has been reported that 1.3 million have left their jobs.

Increase in job vacancies in Spain

During a debate for Spanish news agency Europa Press, Spain’s Second Deputy Prime Minister and Minister of Labour Yolanda Díaz expressed concern and urged that the “great resignation” in Spain needed to be stopped.

“Spain needs 109,000 workers. Part of these vacancies are in the hospitality sector, but there are others that have to do with the need for highly qualified personnel linked to technological and digital transformation”, she said.

According to the latest social security statistics, around 30,000 workers in Spain voluntarily left their jobs in 2021 and the trend is continuing to rise.  

A survey by Spanish jobs website Infojobs in February found that 27 percent of employees in Spain were contemplating quitting their jobs in 2022, which could suggest that many daren’t resign or that many more will hand in their notice in the following months.

However, Díaz explained that based on Eurostat data, out of all the countries in the EU, Spain is the least affected. The proportion of vacancies in Spain is around 0.7 percent, while the European average exceeds 2.5 percent and in countries such as Germany, it is at 3.8 percent.

Another report carried out by human resources company Hays on work trends for this year indicates that 77 percent of Spaniards surveyed said they would change jobs if they could.

READ ALSO: Meta, IBM, Google, Amazon – How thousands of tech jobs are being created in Spain

68 percent of them confessed that they are actively looking for another job and the main reason they argue is to find a job with a better salary. 

This data reveals that the reasons for the great resignation are slightly different in Spain from the reasons why people are quitting in the US, which is mainly due to burnout and the desire to find a job that fulfils them and makes them happier, rather than just seeking out a better opportunity for more money. 

Solutions to the problem

During her speech, Díaz pointed out the importance of increasing the minimum wage (SMI) and ensuring that “they are not the cause of the increase of CPI [Consumer Price Index]”.

According to Hays, 71 percent of the Spanish companies surveyed plan to hire more employees in 2022, and 67 percent of them consider that their business will increase during the year. The most sought-after employees are salespeople, engineers and computer scientists. 

Despite this news, Spain’s labour reform which came into force at the beginning of 2022, means that the spike in permanent contracts is improving job security and quality for thousands of previously exploited temporary workers.

READ ALSO: How a spike in permanent contracts is improving job security in Spain

Around a third of employees hired in the first four months of 2022 have been given permanent contracts. 

The rate of new permanent contracts has been rising month on month this year, representing 15 percent of new hires in January, 22 percent in February, 31 percent in March, and 48 percent of new contracts in April.

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The tax cuts and other benefits Spain’s new Startups Law will bring to entrepreneurs

Foreign entrepreneurs have been waiting for years for Spain's highly anticipated Startups Law to be finalised. The latest news is that it will come into force in September 2022; and new details on the benefits it will bring have also been released.

The tax cuts and other benefits Spain's new Startups Law will bring to entrepreneurs

Spain’s new Startups Law, which the Spanish government first announced in 2019, could finally come into force in September 2022, as indicated by Economy Minister Nadia Calviño. 

For the first time, Spain will have a law directly aimed at the particularities of small technology-based companies. 

The new Startups Law hopes to attract foreign companies, making it easier for startups to choose Spain by giving them incentives such as tax reductions. 

Although there is still a long way before the final text of the Startups Law is published, and it may have to go through several amendments yet, here’s the latest on the draft law so far and the benefits it will bring.

There will be no obligation to pay the social security self-employed fee for multiple activities

One of the most important announcements is the elimination of having to register as self-employed (autónomo) in the Special Scheme for Self-Employed Workers (RETA) for three years, provided that the entrepreneur who launches the startup is in turn hired as an employee by another company.

This is the case for 25,000 self-employed workers in Spain who currently combine working for themselves with being hired by someone else.

Overall, it’s good news as Spain’s social security fee is among the highest in Europe at €294 a month. 

Self-employed workers will have three chances to benefit from the new law

The failure of a business is something that is being contemplated for the first time in legislative text in Spain.

The startup bill will make serial entrepreneurship easier, meaning that a freelancer who has started a business, which ultimately doesn’t work, can try again and can continue to benefit from the same advantages. Specifically, entrepreneurs are allowed to benefit from the Startups Law up to three times.

Improvement in the tax treatment of stock options

Stock options are often a form of remuneration for work that is frequently used in startups. It consists of offering directors or employees the possibility of obtaining shares of the company where they work. Specifically, the tax exemption amount will rise from €12,000 to €45,000.

In addition, tax will only be paid on these shares when the sale of them takes place, or when the company goes public.

Deduction in Corporation Tax to 15 percent

It will give startups and investors a reduction in Corporation Tax from the current 25 percent to 15 percent. 

The elimination of obstacles for foreign investment 

One of the main problems foreign investors encounter when they want to invest in a Spanish startup is bureaucracy.

As a result of this, the new law aims to eliminate the obligation for international investors to request a NIE (foreigner ID number) to carry out this type of action. Both investors and their representatives will only need to obtain Spain’s tax identification numbers (NIFs).

Tax breaks

The new law includes a series of tax benefits in order to make national investment more attractive.

The maximum deduction base for investment for newly or recently created companies will be raised from €60,000 to €100,000 per year and the type of deduction will increase from 30 to 50 percent.

The period of time that a company is considered ‘recently created’ will increase

The period that is considered ‘recently created’ for eligible companies will go up from 3 to 5 years old. For biotechnology, energy or industrial companies, the bracket is wider still – 7 years.

Who will be able to benefit from Spain’s new Startups Law?

The Startups Law is open to anyone from the EU or third countries, as long as they haven’t been resident in Spain in the five previous years. It will allow them to gain access to a special visa for up to five years. 

This visa will be open to executives and employees of startups, investors, and remote workers, as well as their family members.