Spain has long been struggling with the issue of precarious work, with a majority of people working in temporary, part-time or low-paid jobs without security or benefits. However, in recent years, the Spanish government has been taking steps to address this problem and improve working conditions for all. From introducing new labor laws to implementing policies that encourage permanent contracts, Spain is determined to create a more stable and fair job market. In this article, we take a closer look at how Spain has taken on the problem of precarious work and what impact it has had on the lives of workers.
Europe is well-known for its worker protections and regulations, but there is a dirty secret that not everyone is covered by them. Countries like France, Italy, Portugal, and Spain have a system of “insiders,” who are difficult to fire, and “outsiders,” who move from one temporary contract to the next. Unfortunately, this disproportionately affects young people, with 37% of the eurozone’s under-30 workers on temporary contracts. Spain has been particularly affected, with over 50% of its under-30s on temporary contracts for most of the past decade.
However, the Spanish government has taken steps to tackle this problem with their new labor reform aimed at “recovering workers’ rights without hurting business.” The reform aims to put an end to back-to-back temporary contracts and make permanent jobs the norm. In addition, a new “open-ended contract for intermittent work” has been introduced, which allows employees in seasonal sectors to remain linked to the company during the off-season and called back when demand resumes.
Economics professor Jorge Uxó from Complutense University of Madrid states that this reform has had an “extraordinarily positive” impact. The share of employees on temporary contracts dropped from 26% in 2021 to 18% by the end of last year. For under-30s, the rate dropped from 58% to 39%. Moreover, this was achieved during a period of overall job creation, meaning there were no mass dismissals of temporary workers. The number of workers on permanent contracts rose by 1.6 million, while the number of workers on temporary contracts fell by 1.2 million between the fourth quarter of 2021 and the fourth quarter of 2022.
Bank of Spain research indicates that those on temporary contracts tend to spend less than those on permanent contracts, meaning that a rise in stable jobs can be good for the economy. While the reform is certainly positive, there are still some concerns with the use of the new “intermittent open-ended” contracts, which some argue are not much better than temporary contracts. However, they do offer more rights to workers, and they only account for a minority of new permanent contracts.
Despite the success of the reform, Spain still has a high share of temporary contracts, and it remains to be seen how the reforms will perform during a downturn. Moreover, it’s unclear whether or not the policy will boost training and productivity in the longer term. Rafael Doménech, the head of economic analysis at BBVA, states that while the balance is positive, “the jury is still out” on the reform’s effectiveness.
However, the most significant lesson may be that the rising insecurity in today’s work culture is not an inevitability that policymakers must adjust to. Rather, it is a problem that can be fixed, as demonstrated by the Spanish government. With further political will and action in other European countries, a more secure work culture could be created, which would enable workers to have more certainty about their future and, in turn, lead to greater economic prosperity.
