Record number of technology layoffs in Spain. What is the situation for foreign employees?

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AGM Abogados

The technology labor market in Spain is at a time of high demand, with more than 120,000 vacancies to be filled according to Data provided by DigitalES (software development, AI, Cloud, cybersecurity, Big Data, are some of the most prominent). Technology companies are in a trend of hiring more foreign staff, allowing Spain to consolidate as a digital talent Hub (SpAIn Talent Hub) enhanced by a combination of factors such as quality of life, attractiveness for investors and a more favorable regulatory framework with the recent approval of the Startups Law (for entrepreneurs and digital nomads).

However, there is also a wave of layoffs within the technology sector, especially in large multinationals such as Amazon (18,000), Google (12,000), Meta (11,000) and Microsoft (10,000), Wallbox (15% workforce), Typeform (30%) and Glovo (250), which are looking to reduce costs in their oversizing. According to Layoffs.fyi data, job destruction in the sector in Spain has reached 246,000 from 2022 to 2023, with a record 88,000 layoffs in the month of January 2023.

Highly qualified foreign professionals as a great opportunity for Spanish SMEs

Although this may represent a challenge to incorporate so many people into the labor market, it can also be seen as a great opportunity for SMEs1 to hire highly qualified and specialized workers who were previously hired by large multinationals to fill the more than 120,000 vacancies that the sector currently has.

The shortage of technological profiles in Spain is nothing new, and in recent years companies have been looking for talent outside our borders, so it is increasingly common for Spanish companies to hire foreign profiles. Most of these profiles usually fit with a type of residence permit known as “Residence permit for highly qualified professionals”, whose processing is much more simplified and agile -compared to other permits in the Spanish immigration legislation- and which allows the rapid incorporation of these profiles in companies (20 working days).

In the same line of favoring the hiring of qualified foreign profiles, attracting and retaining talent in Spanish companies, this type of permit is issued linked to maintaining the initial employment relationship with the company that requested the permit. In such a way that, if the worker is dismissed, he/she will have to obtain a new residence and work permit with the second company in order to be able to work.

What about foreign workers after the recent wave of tech layoffs?

What is the situation for foreign workers in the technology sector who have recently been laid off?

The immigration legislation (DA7th of the Entrepreneurs Law) establishes that any event affecting the initial conditions must be reported to the immigration authorities (known as UGE, abbreviation of “Unidad de Grandes Empresas y Colectivos Estratégicos”) within a maximum period of 30 days. It is therefore understood that during this period of time, the foreigner must also regularize or modify his residence in order to accommodate his new immigration status.

How to regularize the new immigration status as a result of a dismissal?

This can either be due to a new contract with a local company – in which case a new residency will have to be arranged and processed – or due to being the beneficiary of an unemployment benefit (known as “paro”) and in which case the legislation allows the residency to be renewed until the unemployment benefit is exhausted.

Can another Spanish company in the sector hire a worker who has a previous permit linked to the first one?

 If another company other than the initial one intends to hire a foreign worker in possession of a residence permit for a qualified professional, it may hire the foreigner, provided that it previously initiates the application for the new permit. This can be done by processing the same permit that the worker had, but linked to the second company, or by modification to another foreigner’s regime (authorization of residence and work as an employee), provided that the foreigner has been legally and continuously residing in Spain for at least one year.

The hiring of these profiles from Spain will also be faster as some administrative processes of origin, such as visa management, will be reduced, so it can be an effective way to incorporate these people back into the labor market and fill vacancies in the sector.

For any questions regarding the recruitment of highly qualified foreign professionals or any other inquiry, please contact us.

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