Spain and Euskadi Face Labor Shortages Amid Economic Growth Challenges

Spain and the Basque Country (Euskadi) are confronting significant economic challenges despite recent growth, with labor shortages and sectoral constraints threatening future expansion.

Mikel Torres, Vicelehendakari and Minister of Economy, Labor, and Employment of Euskadi, emphasized the crucial role of immigration for economic development and social cohesion in the region. Immigrants constitute 14% of the Basque population and over 10% of employment, particularly in construction and other key sectors. Approximately 60% of employed migrants hold qualified jobs, and the Lanbide Employment Observatory predicts 680,000 job openings over the next decade largely due to retirements, signaling a sharp labor supply deficit. Torres highlighted efforts to regularize migrant work status, with nearly 10,000 requests processed since July, and advocated for stronger integration policies linked to social inclusion to meet labor demand.

At the national level, Spain has experienced robust growth leading Europe, but analysts forecast a slowdown with GDP growth expected to fall to 2.1% next year. The tourism sector, a major growth engine, is reaching saturation and faces labor challenges amid declining purchasing power in key markets, limiting further expansion. Additionally, rising housing costs, high labor expenses, and a shortage of skilled professionals constrain other sectors like construction, despite clear demand. Legal uncertainties and increased taxation hinder investment, while export growth faces obstacles from trade tensions and inflation. Analysts warn Spain risks lagging behind emerging growth areas such as artificial intelligence unless investment attractiveness improves.

Overall, both Spain and Euskadi are grappling with demographic shifts and structural constraints that could curtail their economic momentum. Immigration is seen as a strategic instrument to replenish the workforce and sustain growth, but policies must focus on effective integration and fostering diversity. Continued efforts to address skills gaps, regulatory hurdles, and investment climates will be critical to revitalizing Spain’s economic prospects and maintaining leadership within Europe.