A record year for employment and better quality jobs – Analysis – Eurasia Review

Written by William Chislett

Despite the highest number of people employed last year, Spain’s unemployment rate remains almost double the EU average.

According to INE’s quarterly survey, the number of employed people at the end of September was a record high of 21.26 million people, 1.3 million fewer than at the end of 2019, before the first coronavirus infection was reported in Spain in January 2020. increased. (to be published later this month) is unlikely to be much different. Spain’s job creation (up 7.2% compared to pre-pandemic levels) was higher than France’s 5% and Germany’s 1.4%.

The seasonally adjusted unemployment rate is just under 12% (2.8 million people unemployed), a far cry from its peak of 26% in 2013 during the Great Recession, but the lowest it reached in 2007 at the height of the construction-driven boom. This is not even close to the current figure of 8%. (See Figure 1). The unemployment rate among young people (under 25 years old) has reached 28%.

Figure 1. Seasonally adjusted unemployment rate, 2007, 2013, November 2023 (%)

Recovering consumption, record exports and a strong economic recovery have seen production (GDP) return to pre-pandemic levels in mid-2022 after plummeting 11.2% in 2020, the steepest decline within the EU. The economy is gaining traction. Upon arrival of international tourists. Last year’s GDP growth rate was approximately 2.4%, far exceeding the EU’s 0.6%. Of the 720,000 jobs created in the year to September, 682,400 were in the services sector.

Following the 2021 labor market reform (the seventh since 1994), which took full effect in March 2022, not only has employment increased, but its quality has also improved. This resulted in a significant decrease in overall employment. temporary employment One of the most harmful elements of Spain’s dysfunctional labor market, which primarily affected young adults, the rate was 12.5%, up from 25% in 2018, similar to many other EU countries. but much higher in the public sector (estimated increase up to 30%).

This was the first reform to prove effective for fixed-term employment after more than 40 years of attempts. Previous reforms attempted to limit the use of temporary contracts by increasing severance pay, limiting their duration, and imposing penalties on contract rollovers, but with little success.

The reforms, agreed between the government, trade unions and employers, reduce the number of contracts to three: indefinite (permanent, default option), temporary (for specified reasons) and training, reducing the number of contracts to three. was maintained. These included the ability of employers to unilaterally make significant changes to the terms and conditions of employment for economic, technical, organizational, or production reasons, which served to protect jobs.

The reforms tighten the terms of temporary employment, a widely abused system, place limits on the length of use of temporary contracts, create penalties for continuous rollovers, and eliminate project-based contracts that last only until the project is completed. Fixed and discontinuous (intermittent and unlimited) contracts are more versatile, and the superiority of sectoral collective agreements over company-level agreements in wage setting has been restored, but collective agreements are difficult to pay. For companies in difficult situations, rigidity continues.

Intermittent indefinite-term contracts are permanent contracts but are used in seasonal work, staffing agencies, contracting and subcontracting. These can be used for days, weekends, months, quarters, years, or specific time periods.

Almost 16% of employed social security participants in 2022, the first year of the reform, were on temporary contracts, down from 22.5% in 2021, and 58% were on temporary contracts compared with 83.7% of jobs created. (See Figure 2).

Figure 2. Annual employment numbers

Temporary contacts have become more onerous, but permanent contracts have remained largely unchanged, resulting in the much more protected “insider” terms (perpetual contracts) and “outsider” terms. The disparity in conditions between the parties was maintained, albeit to a lesser extent (temporary contracts). The number of self-employed people has also remained almost unchanged.

The cost of terminating permanent contracts (both regular and fixed discrete contracts) remains unchanged and remains significantly higher than temporary contracts, while most new contracts are now open-ended. Under the 2012 reform, retirement benefits were reduced from 45 to 33 working days per year.of Lord EmpresariosThe main business lobbies say it should be closer to the 12 days in other EU countries.

This reform reduced “contractual” temporary employment, but also alleviated labor insecurity, characterized by short periods of employment and frequent transfers between jobs and unemployment, where workers experience , has not been successful in reducing so-called “experiential” temporary employment, the first report said. Evaluation of the reforms by a group of economists published by Fedea.

The report uses a new database of workers enrolled in Social Security to track job creation and destruction. This is also the first study to use extensive high-frequency data to examine the dynamics of job creation and destruction. This study sheds light on the nature of precarious work by leveraging real-time data.

The authors conclude that if the goal is to reduce ‘contractual’ and ‘experiential’ temporary employment, all open-ended contracts need to be made more flexible. This will make them more attractive to companies and encourage them to change their production models to less seasonal or more value-added temporary activities. By severely restricting the use of fixed-term contracts without changing the flexibility of regular open-ended contracts, this reform encouraged the use of other new, less stable variations of open-ended contracts, such as intermittent open-ended contracts. . The latter do not offer the same level of job security as traditional open-ended contracts, the authors say.

Moreover, significant shifts between contract types have so far occurred without significant improvements in employment duration or stability. Intermittent indefinite-term contracts have higher termination costs and better legal protection than their predecessors, fixed-term contracts, but their very short and intermittent nature means that a significant number of workers choose not to terminate their contracts. You are more likely to be fired voluntarily. Cancellation costs will be incurred.

More time is needed to fully evaluate the reforms, but a start has been made.

• About the author: William Chislett (Oxford, 1951) is an honorary senior fellow at the Royal Institution of Elcano. He covered Spain’s transition to democracy for the Times of London from his 1975 to his 1978. He was then based in Mexico City at the Financial Times from 1978 until 1984.
• Source: This article was published by Elcano Royal Institution.