Spain’s unemployment rate inches up to three million

Spain's unemployment rate edged up slightly to 12.48 percent in the third quarter of this year after declining steadily since the end of 2020, official data showed Thursday.

Spain's unemployment rate inches up to three million
Some half a million people lost their jobs in 2020 in Spain, which has one of the highest rates of unemployment in the Organisation for Economic Co-operation and Development. (Photo by SEBASTIEN BERDA / AFP)

The jobless rate inched up to 12.67 percent in the period from July to September from 12.48 percent in the previous three-month period, national statistics institute INE said in a statement. Youth unemployment now stands at 31 percent.

The number of unemployed people rose by 60,800 in the third quarter to a total of 2.98 million even though 70,000 jobs were created, with most jobs lost in services, including Spain’s key tourism sector, and agriculture.

The jobless rate was still lower than during the same period a year ago when it stood at 14.57 percent.

The number of job seekers in Spain fell below three million in May for the first time since November 2008 at the start of the global financial crisis.

The fall in joblessness was due to a rebound in Spain’s tourism sector following the end of most pandemic travel restrictions and a labour market reform which limits the back-to-back use of temporary contracts.

The number of permanent contracts in Spain in the third quarter rose by 444,200.

Among Western economies, Spain was one of the worst-hit by the economic fallout of the pandemic, with its gross domestic product collapsing by 10.8 percent in 2020, largely due to its heavy dependence on tourism.

Some half a million people lost their jobs in 2020 in Spain, which has one of the highest rates of unemployment in the Organisation for Economic Co-operation and Development.

The government predicts the jobless rate will drop to 12.2 percent at the end of 2023 despite a slowdown in the economy due to soaring inflation and the uncertainty caused by the war in Ukraine.

But many analysts are much more pessimistic. Investment bank ING predicted Spain’s unemployment rate will rise steadily to 14.3 percent in the third quarter of 2023.

It expects the Spanish economy, the eurozone’s fourth largest, will enter a mild recession in the fourth quarter of 2022 that will continue until the first quarter of next year.

“Business confidence has also deteriorated sharply in recent months, which will encourage companies to be more careful with new hires,” ING economist Wouter Thierie said in a research note.

The higher share of permanent contracts, however, will cause the rise in the jobless rate to “be less pronounced than during previous recessionary periods”, he added.

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Your questions answered about Spain’s digital nomad visa

Spain's long-awaited digital nomad visa is finally available, but there is still much confusion about it, so we've answered all your burning questions.

Your questions answered about Spain's digital nomad visa

Spain’s Startups Law, which also introduced a new digital nomad visa, was approved at the end of 2022, but didn’t come into force until January 2023 and all the details are only just now being revealed. 

From how much money you need to your tax obligations and if you can bring family, members, here are all your questions answered. 

READ ALSO – REVEALED: Everything you need to know about applying for Spain’s digital nomad visa

What are the financial requirements to apply for the visa?

You must prove that you earn 200 percent of the SMI or Minimum Interprofessional Salary. The current minimum wage in Spain is €1,000 per month (across 14 payments) or €1,166.67 across 12 payments.

Keep in mind though that the minimum wage is currently being re-evaluated and is likely to go up to €1,082 (across 14 payments) per month in the near future.

This means that currently, you must be able to show that you will have an income of at least €2,333.34 per month or €28,000 per year, but it is likely this will increase. You can prove this amount either with job contracts, invoices or bank statements.

Can I bring family members with me on the visa?

Yes, you are permitted to bring partners and children with you to Spain on the digital nomad visa.

In order to add a family member, however, you must prove that you have an extra 75 percent of the SMI or minimum wage. This currently equates to an extra €875. For each additional family member after this, such as children, you will have to prove you have an extra 25 percent of the SMI, currently €291.66.

READ ALSO: Ten of the best cities for digital nomads to move to in Spain

Do I need private health care?

You must also make sure that you have either private or public health insurance, simply getting travel insurance with health coverage is not enough.

The Spanish government mentions the option of getting public health insurance instead of private cover, but it is not yet clear whether this means that you will have to contribute to the social security system or be eligible for the convenio especial – the public pay-in scheme.

Do I have to have any professional qualifications? 

You must prove that you either have professional qualifications or a degree relating to your job or that you have at least 3 years’ experience working in your field. 

How long is the visa valid for?

The visa will be valid for an initial period of one year, however, it can be renewed for up to five years. After that, if you want to continue living in Spain, you will be able to apply for permanent residency.

Does the visa give me access to travel around the EU?

Yes, once you have your visa and you’re in Spain, you will be able to apply for a residency card. This will allow you to travel throughout the EU during the time that you’re living in Spain.

Keep in mind though, it won’t give you the right to work or live in other EU countries, but you will be able to go for short breaks. 

How long do I have to stay in Spain for the visa to be valid?

Many digital nomads choose to split their time between different countries. If this is your case, and you want to split your time between back home in the US or the UK for example, you must make sure you stay in Spain for a maximum of 6 months per year for your visa to remain valid.

Do I have to pay tax in Spain?

Yes. If you stay longer than 183 days, then you will be considered a tax resident in Spain. This means that any money you earn while working in Spain, even if it comes from clients or companies abroad will be taxable.

However, the digital nomad visa grants you tax benefits, such as being able to pay the Non-Residents Tax Rate (IRNR) rather than the regular progressive income tax (IRPF) that Spain’s resident workers pay.

Non-Resident Tax was previously only applicable to non-residents such as second-home owners, but an exception has been made for digital nomad visa holders even if they spend more than 183 days a year in Spain and are therefore technically fiscal residents.

IRNR is generally 24 percent in Spain and digital nomads will be able to pay this instead of the more progressive rates, as long as they earn below €600,000 a year.

This favourable tax rate will be available for four years, if you choose to renew your visa.