Executive Search in Spain – 2019 Outlook

Growth Returns but Government Shaky

Economic growth has been strong but is projected to moderate in 2019. Even so, the unemployment rate will continue to decline, but remain high. Domestic demand, supported by low interest rates and strong employment growth, will remain the main driver of growth.

A durable reduction in the high public-debt-to-GDP ratio will require further reductions in the structural balance and the government is expected to stick to medium-term fiscal consolidation targets. It will also require maintaining strong economic growth.

To boost growth, productivity-enhancing reforms to increase competition and innovation, and to improve skills, will be needed. This would also generate better paid jobs and reduce inequalities.

Following a corruption case that damaged the credibility of the ruling People’s Party, a censure motion led to the collapse of Mariano Rajoy’s minority government on June 1st. Pedro Sánchez, of the Spanish Socialist Workers’ Party (PSOE), now heads a weak centre-left minority government.

Sánchez intends to see out the parliamentary term, which ends in mid-2020, but an earlier vote is likely.

Catalan Secession

2017 and 2018 in Spain were marked by the Catalan referendum to achieve secession. Following the “yes” vote and faced with the determination of the Catalan authorities under the leadership of Carles Puigdemont to declare independence, the region was placed under the central government’s control in Madrid.

The enacting of this exceptional provision in the Spanish constitution was followed by the calling of early regional elections, in which the central protagonists for independence, despite being pursued by legal action, stood and obtained the majority again.

After estimated real GDP growth of 2.6% in 2018, the prolonging uncertainty surrounding this political situation is expected to decrease Spain’s GDP growth to 2.1% in 2019/2020

In short, the Catalan crisis will continue to shape Spain’s immediate economic future. Banco de España has estimated losses derived from the Catalan crisis at 30 billion euros. Inflation is expected to remain at a 1.5 to 1.7% range for 2018. The public deficit is also projected at 2.5% of GDP in 2018 and 1.8% of GDP in 2020.


The banking sector is still fragile, profitability is insufficient and sovereign risk remains significant. Public debt has stabilised. The Government was forced to raise the interprofessional minimum salary (SMI, in Spanish) by 20% and other salaries by 3%, risking reduced competitiveness vs other European labor markets.

Structural reforms to give autonomous regions greater budgetary and financial stability remain the areas of increasing importance. Other pending reforms include technological innovation to diversify the Spanish economy, fostering better employment conditions, an improved R&D ecosystem, and social programs based on the European Pillar of Social Rights approved in November 2017.

Unemployment still high

The Spanish unemployment rate has fallen, but still remains very high. Banco de España also estimates a 14.2% unemployment rate in 2018 and a 10.7% unemployment rate in 2020. However, the quality and salaries of these new jobs have yet to improve.

A third of employees earn a maximum of EUR 707 per month. One fifth of employees work under temporary contracts, doubling the regional average. In general, this decade had a negative impact on Spanish living conditions and inequalities.

After a long and devastating crisis, Spain has finally found the path to growth and the economic situation is improving rapidly. The Spanish government believes that by 2020 Spain will be in the same situation as it was before the crisis in terms of employment.

The executive search market continues to be very competitive with new companies entering the business. Due to the shortage of talented professionals we observe growing interest for executive search services from mid-size local companies.

For information contact Elena Terol, Cornerstone Madrid