Spain’s employment market is accentuated by intersections of transformative trends with dynamic demographic and economic factors. Digitalization across industries is fundamentally changing the efficiency and effectiveness of employee work and how products and services can be delivered to customers.
A consequence of this trend is the creation of new jobs that require workers with a different set of skills. Additionally, as companies transfer their workloads to the cloud, more and more tasks can be completed remotely. This is true for professionals in the recruitment industry and the business world at large.
In the Spanish market, these trends are being introduced into a society marked by high unemployment compared to its peers in the European Union. According to the European Commission, “an aging population, high unemployment (highest among young people), long-term unemployment, the reported temporary nature of the work, and the strong concentration of small and medium-sized enterprises” are the country’s key challenges. Despite this challenge, Spain remains an attractive economic market for international employers and job seekers.
Similar to other markets, the pandemic affected the tourism and hospitality sectors as well as temp jobs and the self-employed. The economy was helped by the Spanish government’s scheme to increase job retention during the pandemic. However, the unemployment rate remains high with the Organisation for Economic Cooperation and Development (OECD) predicting an overall jobless rate of 14.2% in 2022 and 13.6% in 2023. Additionally, the Great Resignation that began in the United States in 2021 has also reached Spain - in spite of high unemployment and job vacancies.
This prompted the government to announce at the end of 2021 that it would allow employers to hire foreign workers residing outside of the country to ease the difficulties of filling certain positions with domestic or EU-based workers. In a media debate, Yolanda Diaz, the country’s Second Deputy Prime Minister and Minister of Labor, said that job vacancies were concentrated, “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”.
This situation increases the chances for recruiters in the Spanish market to make an impact in filling this gap. Entrepreneurs can realistically look at this employment landscape and see an opportunity to jump into the fray and make an impact on the Spanish job market. To make a recruitment agency venture successful, aspiring business owners will need to assess the following factors:
- Your agency’s niche
- Your competition
- Investment scope
- Regulatory considerations
- Business goals
- Marketing strategy
- Tech adoption
- Employees
In the next sections, let’s break down the decisions that need to be made and steps that will need to be taken to get a recruitment agency off the ground in Spain.
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Identify your agency’s niche
In Spain, the labor market is considered to be fairly restrictive - especially compared to English-speaking countries in Europe. The impact of these labor policies are felt most by immigrants and young, unskilled workers. According to the World Employment Confederation (WEC), 54% of agency workers in Southern Europe - which includes Spain, Portugal, Italy, and Greece - are employed in the services sector followed by manufacturing and agriculture.
As a result, when selecting an area of focus for your recruitment business, it is important to consider how well it will serve the business to take a broader generalist or a narrower and deeper specialist approach. The access to a wider pool of applicants and clients as a generalist recruiter may help pay the bills. Specialists in recruiting for jobs in tech have more knowledge of the industry to quickly identify the right talent for employers.
Just as we have seen in other countries, the industries that fared well during the previous two years of the pandemic are taking massive steps to hire new employees. BNP Paribas economic research identifies these Spanish industries as health and social activities, information and communication services, transport and warehousing services, and construction. Any of these industries could be a great focus area to get your recruitment business off the ground.
Know your competition
Recruitment agencies operate in most regions of Spain. Although international agencies such as Approach People Recruitment, Talent Search People, and Adecco operate in the country, the market is mostly comprised of home-grown agencies that identify talent for employers across the country.
During the COVID-19 pandemic, Spanish recruitment agencies earned 4.7 billion euros in revenue in 2020, which was a 15% decline from the previous year and second to France in the region. Direct recruitment revenue declined by 10% due to the uncertainty around governments’ policies to contain the spread of COVID-19.
The Spanish government plans to recover by implementing an economic plan to make the country more resilient to future crises. The European Commission notes that the Spanish government plans to make 112 investments and implement 102 reforms aimed at creating a country that is more, “sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions.”
Through this plan, 250,000 jobs are expected to be added for citizens by 2026. As the economy rebounds, new recruitment agency owners have a chance to build a thriving business around industries like tech that are growing and expanding rapidly.
Understand the total cost of investment
As with any large project, it is essential to scope out the expected costs associated with the set-up and ongoing operation of your agency. Any legal resident in Spain can start their own business, but the initial set-up can be a time-consuming process.
In general, the process for foreigners starting a business in Spain begins with obtaining an identification number from the government - called the Número de Identificación de Extranjero (NIE) - at the Oficina de Extranjeros or Foreigners Office. With a NIE, you will be able to open a business bank account, secure a company formation number or Numero de Identificacion Fiscal (NIF), and create a corporate business entity.
From there, you will need to determine how you would like to set up your corporate entity. It can be structured based on if you are self-employed or if you are creating a limited liability company and there are several types to consider. After selecting a company name and verifying that it is not already in use by the Commercial Registry (Registro Mercantil), you will receive a certificate that enables you to operate in Spain.
More steps are required depending on what type of business entity you create. Then the company needs to be registered with the tax office and social security. This is why there are consultants who assist with completing all the steps correctly and in a timely manner.
The next steps are to open a bank account, get a Spanish phone number (either via a domestic SIM for your mobile or a fixed landline) and internet services, and select an official postal address. With more professionals opting to work from home, it may not be necessary to open an office location when you are first starting the business.
Whether or not you open an official office will also determine how much tech hardware and office equipment you would need to invest in. Your recruitment agency will also need business insurance at a level that is determined by the size of your organization, number of employees, and any assets your company owns.
Once the business is set up, the scope for ongoing costs such as posting on job boards, purchasing a LinkedIn premium membership, joining professional associations, employee salaries, IT support, and marketing will need to be determined. All of these costs should be weighed against your agency’s potential earnings in the agency business model you create.
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Regulatory considerations
As mentioned previously, Spain’s labor markets are fairly restrictive compared to other parts of Europe. There are regulations governing everything from employment contracts to wages. As a temporary work agency, your business would be required to offer workers the same rights and protections as any other type of worker.
In light of the pandemic, the government has recently announced a reform of temporary contract legislation that will reduce the country’s high number of temporary contracts and the maximum duration of these contracts. For this reason, it is essential to have a clear understanding of the regulations governing the hiring market in the country.
Establish your business goals
Making a successful recruitment agency in Spain starts with having a clear vision for how your agency will operate today and in the future. A clear strategic vision encourages you to follow the bold plans and see the potential paths your business may take. It will also ensure that you create a business model that is scalable and agile in response to market changes. An essential part of establishing the company vision is defining the values that will guide employees to meet their goals.
Create a strong marketing plan
Apart from the services you offer, the way that your recruitment agency is marketed can have a substantial impact on the company. Measurable digital marketing practices are delivering tremendous value to companies at a time when authenticity and personalization are key expectations of consumers. It is incredibly important to determine how your agency will utilize online and traditional channels to raise awareness and build the brand. In Spain, leveraging corporate social media channels as well as sites such as InfoJobs, Laboris and LinkedIn can help to advertise jobs and the agency.
Building relationships with influencers and candidates in your business’ focus area will result in a loyal and engaged audience. Additionally, minimizing negative experiences and erosion of the agency’s reputation will enable your business to attract the right talent for jobs and grow over time.
Adopt tech solutions from the start
With digitalization accelerating rapidly in many industries, it is an opportune time to adopt technology solutions to address daily business tasks. An advantage of a start-up over traditional incumbents is the ability to embrace advanced technology and establish new ways of working without legacy solutions or processes getting in the way.
Professionals also gain valuable experience working for a company that allows them to use leading-edge technologies in their job. According to the OECD, “Spain still has considerable scope to reap the benefits of the adoption of digital technologies and, perhaps more importantly, their effective use to produce new business models and products.”
In addition to solutions that are dedicated to specific business functions like finance or payroll, recruitment agencies can gain an advantage by investing in cloud-based CRM and applicant tracking system (ATS) solutions.
Deploying these solutions will simplify daily tasks, speed up candidate sourcing and hiring processes, and provide intelligence about how the business is functioning. Powerful recruitment technology like Manatal combines the ATS and CRM capabilities into one solution to make recruiters’ jobs easier. Ensure that you are selecting tech solutions built with security and local regulations in mind that will grow and evolve with your business.
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Make lasting hires
The most important element of a successful recruitment agency is your workforce. Employees are arguably your agency’s most valuable asset as these people are the face of your organization to candidates, clients, and future colleagues. Keeping them happy and motivated is a must to maintain a low turnover rate and protect the agency’s reputation.
Some important ways to invest in your workforce include:
- Providing career development and training opportunities
- Cultivating positive and diverse work environments
- Hiring management that displays empathy and listens to employees
- Creating a work environment and business model that are conscious of and responsive to employees’ well-being, happiness, and workload
RESOURCES: Browse through our collection of ready-to-use job description templates to kickstart your agency.
Taking the first step
Starting a new business will always be difficult. However, with a clear vision, a solid plan, and trusted partners, your business will have a chance to succeed in a highly regulated labor environment.
As you get your recruitment agency up and running, look to company partners like Manatal to offer you peace of mind around issues like security and compliance while you focus on the daily responsibilities of running a business in Spain. Start your 14-day free trial (no credit card required) and discover what you can do with Manatal.
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