Six months after Spain enacted major reform to reduce job insecurity, the number of fixed-term contracts has fallen sharply, giving the government welcome respite in a difficult economic environment.
Spain has long been one of Europe’s nations with the highest number of temporary contracts and in June saw unemployment figures fall for the sixth straight month, with Labor Minister Yolanda Diaz on Monday hailing “historical” data as evidence of a “paradigm shift”.
At the end of June, the number of job seekers in Spain stood at 2.88 million, compared with 2.92 million in the previous month and the lowest monthly figure since the financial crisis began in 2008.
The decline was driven by a significant increase in jobs, with 783,595 permanent contracts signed in June, the highest monthly number on record.
“This is a record number of permanent contracts, accounting for more than 44 percent of the total new jobs,” she said.
At this time of year, when tourism and agriculture are flooded with temp jobs, permanent contracts tend to account for just 10 percent of new hires.
“We have 740,000 more people … on permanent contracts than before the pandemic,” Prime Minister Pedro Sanchez said this week.
Diaz wrote on Twitter that the increase “clearly shows the impact of labor reform”.
But she warned: “There is still a lot to be done, but we are showing that there is an alternative model to job insecurity: decent work with rights.”
– Correction of a central vulnerability –
The reform, which came into force on January 1 after a hard-fought agreement between the government, employers’ associations and unions, restricts the simultaneous use of fixed-term contracts and makes open-ended contracts the rule rather than the exception.
This reform “was demanded by Brussels,” explained Carlos Victoria, a researcher at Esade Business School, after many Spanish companies adopted a habit of “filling existing positions with fixed-term contracts.”
Almost 22 percent of Spanish workers were on a temporary contract before the pandemic, according to Eurostat, compared to an EU average of 14.4 percent.
For many economists, this phenomenon – prompted by a 2012 law by a Conservative government to boost employment following the financial crisis – is one of the main weaknesses of the Spanish job market.
But observers are divided on whether the reform can heal the fragility of the Spanish labor market.
– ‘Disguised’ reality? –
For the general workers’ union UGT, the results of the first half of 2022 confirm “that the new labor reform is proving to be effective in improving the quality of employment”.
But the USO union said 60 percent of the permanent contracts signed in June were for “part-time” work, or so-called “permanent permanent contracts,” where an employee becomes a permanent employee but only works during certain months of the year.
“The permanent permanent contracts are the new fixed-term contracts … which completely pervert the numbers,” said USO Secretary General Joaquin Perez.
For the right-wing opposition People’s Party, the reform was more of a window dressing.
“There’s a reality in disguise,” said PP number two Cuca Gamarra, who this week accused the government of presenting what appeared to be open-ended contracts “which essentially weren’t.”
However, the rise in discontinuous fixed contracts was only part of the story, according to Esade researcher Victoria.
The labor reform has resulted in “net permanent job creation” and “greater protection and even greater stability” for temporary workers, he said.
However, there is nothing to suggest that the trend will continue in the coming months.
“We are in a period of great economic uncertainty,” particularly with very high inflation, Victoria said.
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