With the shift to remote and distributed work, companies are increasingly looking beyond borders in their search for talent—especially when it comes to specialized technical skills that are in high demand and short supply in local markets.
One hiring destination that’s garnered a lot of buzz in recent years is Spain. What makes this sun-drenched, Southern European nation such a hot talent market for employers, and an attractive home base for international tech talent? Whether you’re a People professional, talent leader, hiring manager, or business executive looking to expand into Spain, here’s an overview of what the Spanish market has to offer.
Why hire in Spain
Spain offers a booming tech ecosystem, a thriving startup scene, favorable laws, and most importantly, a strong talent pool comprising both Spaniards as well as expats. Let’s consider each of these points in turn.
Spain’s tech ecosystem is booming
“The tech startup ecosystem is starting to take off. I love building out my network with so many diverse techies.” —Ryan Newell, Oyster employee in Barcelona
Spain is home to a growing tech ecosystem—not just the established tech hubs in Barcelona and Spain, but also emerging hubs in cities like Valencia, Malaga, and Bilbao. The search giant Google, for instance, opened a cybersecurity center in Malaga in 2022, with a planned investment of $650 million over five years.
As the tech and startup scene grows, Spain is also attracting more international investors to the region. For instance, over 80% of seed and Series A rounds in 2020 included international investors. According to Dealroom’s Spain tech ecosystem report:
- The combined enterprise value of Spanish startups is €93 billion in 2023.
- Spanish startups raised €4.7 billion in venture capital in 2021 and €4 billion in 2022.
- Spain ranks 6th in Europe and 16th worldwide for total investment raised in 2022.
Feeding into the Spanish tech scene is a strong higher education system that includes top-notch technical universities that rank highly for programs in engineering and technology. These highly skilled graduates go on to receive excellent on-the-job training thanks to both Spanish and international tech companies in the region, including unicorns like Glovo, Cabify, Idealista, and Jobandtalent. What this means for employers looking to hire in Spain is that there’s an abundance of highly skilled and experienced tech talent waiting to be tapped.
Spain is an attractive destination for skilled workers
“From skiing to surfing, from nature to culture, from food to wine—Spain is an amazing country to explore.” —Heleen Lodewykx, Oyster employee in Madrid
For tech talent from Europe and beyond, Spain has become a prime destination thanks to its culture, climate, and quality of life. The average cost of living is low compared to other European countries, almost 20% lower than in the U.K., for instance. Rent for a 50-square-meter apartment in Madrid might be around €700-€800, but would be twice as much in Paris.
Spain also offers a comprehensive public healthcare system, in addition to affordable private options. The warm Mediterranean climate with 3,000 hours of sunshine per year is a big draw as well. Finally, the Spanish digital nomad visa has also attracted top tech talent from around the world.
Favorable labor laws and lower costs
“The new startup law by the Spanish government has made things easier for tech companies.” —Pedro Torrecillas, CEO and Cofounder, Circular
The Spanish government introduced a new Startup Law in December 2022 to stimulate the creation and growth of startups in Spain, as well as bring more talent into the country. It gives easier access to Spanish residency for foreign talent, offers tax benefits to startups, delays the taxation of stock options until the liquidity event, and enables the granting of stock options rather than phantom shares. These new measures will help fuel the continued growth of Spanish tech as it competes against its European neighbors.
Companies looking to hire in Spain will also find that local labor laws often work in their favor. For instance, the notice period in Spain is only 15 days, which means a candidate can start working for your company within three weeks. Similarly, the process of letting someone go is also relatively easy, usually with severance pay of 20 days’ salary per year of service.
Finally, labor costs in Spain are significantly lower than in neighboring countries. For instance, according to local market data from Figures, the average salary for a junior front-end developer in the U.K. is €47,000, whereas the average compensation for the same role in Barcelona would be €33,000.
What to know about hiring in Spain
Each country has its own set of labor laws regulating all aspects of employment, and the same is true for Spain. So before you start recruiting in Spain, it’s a good idea to familiarize yourself with some of the technicalities in order to ensure that you’re being compliant.
Working hours and overtime: Full-time employees in Spain work an average of 40 hours a week, and not more than 9 hours in a day. The maximum overtime allowed is 80 hours per year, with 50% more than their regular pay rate or compensatory paid time off.
Minimum wage: As of January 1, 2023, the minimum wage in Spain is €1,080 per month. Multiplied by 14 payments (more on that below), it comes to €15,120 per year.
13th and 14th month salary: Employees in Spain are entitled to 13th and 14th month salaries in June and December, although it can be prorated and paid out in 12 monthly payments.
Notice period: The statutory notice period in Spain is 15 working days, and can’t be more than that. Even if an employment agreement stipulates a longer notice period, it’s not legally binding.
Paid time off: Spanish workers get a minimum of 23 days of paid time off per year, including one period of two continuous weeks.
Parental leave: Mothers are entitled to 16 weeks of paid maternity leave, of which six must be taken right after the birth, while the rest may be taken later. This is funded by the social security system, although there are some eligibility requirements. The other parent is also entitled to 16 weeks of parental leave.
Termination and severance: In case of termination, employees in Spain receive 20 days’ salary per year of service with the company. The severance may depend on the type of contract, the reason for termination, and their tenure with the employer.
How much does it cost to hire employees in Spain?
“The localized pay approach is the easiest to implement because you start with salaries in the location you know, and then convert them to salaries in other locations using a location factor. But it’s not a perfect solution because you miss out on local market specificities. That’s why we really recommend you use local market data.” —Virgile Raingeard, CEO and Cofounder, Figures
Once you’ve found the right candidate in Spain, you might be wondering how much to pay them. Partly, this will depend on your company’s compensation philosophy. Do you want to take a location-based approach or a location-agnostic approach? If it’s location-based, do you want to localize by city or country? If it’s by country, how will you benchmark salaries in each country? Do you want to consider the cost of living and factors like inflation?
Next, how can you tell what would be considered a good salary in Spain? It’s helpful to research local market rates, so you have some idea about typical Spanish salaries for the role you’re trying to fill. This kind of data can be hard to find, but Figures is a good place to start for data on European markets. You can use their global salary converter to see what a particular role in one city would earn in another city based on the cost of labor and the cost of living differentials.
Once you have the salary figured out, you need to consider additional expenses such as taxes and social security contributions. Use Oyster’s compensation calculator tool to get an estimate of the costs, as well as a detailed breakdown, so that you can be fully informed before you proceed with making an offer.
How to hire and pay an employee in Spain
Let’s say you have your candidate and you’re ready to hire them. What next? How do you legally hire someone in another country? There are a few different routes you can take.
Set up an entity in Spain
One possibility is to set up a legal entity in the country. With this option, your company retains full control of employment contracts, running payroll, providing benefits, and more. However, setting up an entity can be quite expensive, to the tune of tens of thousands of dollars, and require you to navigate various local bureaucratic challenges. You’ll need to become thoroughly familiar with Spanish labor laws and tax regulations, as well as hire lawyers, accountants, and benefits providers to make sure things are done in compliance with local laws. This level of effort and investment upfront isn’t usually worthwhile if you’re only going to be hiring a few employees in Spain.
Use an EOR or PEO
Another option is to use an employer of record (EOR) in Spain. This is a third-party organization that acts as the legal employer of the candidate, and takes care of contracts, payroll, taxes, compliance, and various HR functions. In exchange for a fee, the team member then provides services to your company while being legally employed by the EOR. This is a quick and easy way to hire legally in Spain without opening an entity there.
An alternative to an EOR is a professional employer organization (PEO) that acts as a co-employer along with your company. In this model, your company and the PEO have shared liability for employing the individual. The company looks after the operational aspects of the employer-employee relationship, while the PEO typically handles the outsourced HR-related tasks.
Use a global employment platform
A global employment platform (GEP), like Oyster, is a cloud-based People Ops software solution that companies can use to hire and onboard talent across borders, manage local payroll in multiple currencies, offer localized benefits and equity, all while ensuring local compliance. A GEP like Oyster has legal entities or partners in every country where it operates, including legal and tax experts with local, country-specific knowledge. By layering a software solution on top of HR infrastructure and deep local knowledge, a GEP automates and streamlines global hiring in one intuitive, user-friendly platform. Instead of relying on a patchwork of EORs and PEOs, you can manage your global workforce in one place and ensure a smooth and consistent employee experience across countries and continents.
Simplify hiring in Spain with Oyster
For more information about how to source talent in Spain, how to compensate fairly in the Spanish market, and how to hire compliantly, check out our webinar on hiring in Spain with expert advice from Oyster, Figures, and Circular.
Or if you’ve already found your dream candidate in Spain, reach out to us anytime to learn how you can quickly and compliantly bring them aboard with Oyster.