Temporary contracts and labour market segmentation in Spain: a way for dealing with unemployment in times of crisis? Adoración Guamán Raúl Lorente University.

Temporary contracts and labour market

segmentation in Spain: a way for dealing with

unemployment in times of crisis?

Adoración Guamán Raúl Lorente

University of Valencia

Main ideas• Spain lost more than 3.5 million jobs

between 2008-2014 • A quantitative recovery of jobs has

started during 2014, mostly among male workers.

• This “recovery” shows the consolidation of a new labour standard

Main Questions:oHow could Spanish labour market

loose 3 million jobs?oWhat are the characteristics of this

new standard?oDo we need a new labour law?oIs this new Spanish labour law

contrary to international standards?

oThere is a global trend to this new labour law?

1. The evolution of Spanish Labour Market

Evolution of labour market in Spain: from

1994/2007• Employed population increases 8.5 million people.

Figure 1. Evolution of employed, salaried and salaried private sector employees in

Spain (2002-2015)

Note: Units (thousands)Source: EPA (INE)

• Model of growth based in serious unbalances: oOversize of certain sectors (construction)oUnderdevelopment of others (industry) oAbuse and lack of control of temporary

contractsFigure 4. Rates of temporality in Spain and the EU-15 (1987-2014)

Note: EU-15 (up to 1995 is EU-12). Source: Eurostat.

Evolution of labour market in Spain: from 2008/2014

• Destruction of almost 3.7 million jobs (17.8% of total)

Variation 2008/2015 2008T1 2015T1 Absolute % Occupied people: Total 20.620,0 17.454,8 -3.165,2 -15,4 Self Employed: Total 3.599,6 3.055,0 -544,6 -15,1 Employer 1.132,5 854,2 -278,3 -24,6 Independent worker ( without employees) 2.178,1 2.081,5 -96,6 -4,4 Member of a cooperative 71,8 21,5 -50,3 -70,1 Family business 217,2 97,8 -119,4 -55,0 Employees: Total 17.010,1 14.393,9 -2.616,2 -15,4 Public sector employee 2.920,7 2.956,7 36,0 1,2 Private sector employee 14.089,3 11.437,2 -2.652,1 -18,8 Another situation 10,3 5,9 -4,4 -42,7

Table 1. Variation of the employed population by professional situation (Spain, 2008-2015)

Note: Units (thousands)Source: EPA (INE)

• Unemployment rise:oFocused in the private sector oDifferent impact: women, young

workers and immigrants

• Since 2014: slow employment creation (not recovery)

Figure 2. Male and female unemployment rate

Source: EPA (INE).

Figure 5. Evolution rates of temporality of women and men in Spain

Source: EPA (INE)

Figure 7. Rates of temporality in the private sector and in the public sector in Spain (1987-2015)

Source: EPA (INE)

Note: Units (thousands). *2005 T1 metodological changeSource: EPA (INE)

Figure 9. Evolution of part time rate in Spain

2. A new standard?

Old and new standard • Characteristics of traditional employment

model: wage work, full time and open ended contracts

• Characteristics of the new standardo rise and generalisation of temporary contracts and part-time

work,o de-regulation of open ended contractso new modalities of atypical contracts o destruction of permanent jobs (which would not be recovered),o stabilisation of unemployment rateo modification of the collective bargaining structure and reduction

of the collective agreement’s coverage, o reduction of trade union power, social legitimation and

institutional weight

3. Labour law and new labour standard.

Do we need a new labour law?

Labour law reforms in times of austerity

• Labour law and labour rights have been considered the main causes of job loss

• Labour relations model is accused of “rigidity” and “flexibilisation” is proposed as solution

• Spanish labour law was so rigid?• Several labour reforms have been

adopted between 2012 and 2014• These reforms have been done

following the country-specific recommendations adopted by the Commission and the Council of EU

Evolution of labour market and labour law reforms

• Two phases towards de-regulationo Socialist party government (2009-2011)o Popular party government (2012-2015)

Labour law reforms during the begining of crisis: Phase I (2009-2011)

• Public sector: RDL 8/2010 (wage reduction)• Private sector: Labour law reform. Law 35/2010 (less

temporality/more flexibility/less security for dismissal) The act talks about flexycurity (green paper)

• Constitutional reform: limits of deficit and priority for debt payment

• Reform of training contracts (RDL 10/2011)• Collective bargaining (RDL 7/2011): more

decentralization (but not total and done with social dialogue)

• Pensions:• No revaluation• Increase of minimal age for retirement (67)

Labour law reforms during the crisis: Phase II (2012-2014): the permanent

reform

• Labour Law: o RDL 3/2012 (which became Law 3/2012) (The act talks

about flexycurity (green paper)o RDL 4/2013 (which became law 11/2013)o RDL 16/2013o RDL 3/2014o RDL 8/2014o Law 1/2014o Law 18/2014o RDL 1/2015.

• Pensions: o Law 27/2011 o Law 22/2013

Labour law reforms during the crisis: Phase II (2012-2014): the permanent

reform

• Creation of a new type of contract, the “contract supporting entrepreneurs” with a one-year trial period and tax and social security discounts

• New temporary contracts for young people (first young employment contract)

• Part-time contracts promotion by deregulation of extra-hours and a new part-time contract linked to training

• Reform of training contracts: less security to ensure formation and participation of Temporary Agencies

Labour law reforms during the crisis: Phase II (2012-2014): the permanent

reform

• Internal “flexibility”: mechanisms to amend the provisions set by sectorial collective agreements at the enterprise level including broadly salary opt-out clauses

• Deeply modification of the dismissal procedure and reduction of its cost regarding unfair dismissal severance pay and redundancy payment. Less control possibilities for administrative and judicial authorities

• Deep reform of collective bargaining system:o Widening the opportunities for the employer to modify a

sectoral collective agreements at the level of the undertaking (opting out)

o Granting to the enterprise collective agreement a priority over the sectoral agreement

o Limiting the temporal validity of collective agreements

Spanish “New Labour Law” and international standards

• Criticism of international bodies:o ILO:

• Report of the Committee on Freedom of Association. No 368, June 2013. Case No 2918 (Spain): “the Committee regrets the absence of a genuine consultation process with the trade unions on Royal Decree-Law No. 8/2010 despite the importance of the wage cuts it contained, and stresses the importance of the principles on consultations referred to in the conclusions”

• Report of the Committee set up to examine the representation alleging non-observance by Spain of the Termination of Employment Convention, 1982 (No. 158 ). Criticism of the Royal Decree-Law No. 3/2012 and the Trial Period

o European Committee of social rights• Constitutional Court has considered these reforms

compatibles with the Spanish constitution (vid. Resolutions 119/2014 y 8/2015

Is there a global trend? From the south to the nord? From USA to the EU?

Global trend:

• ILO 2015: The traditional employment model is changing in developed countries. In advanced economies, the standard employment model is less and less dominant (…). .

Southern Europe trend:

• In Spain (as in Greece) the "standard employment relationship" wasn't as established as in other countries: the destruction of its trends has been easier

• “Flexibility” vs. “Rigidity”: was the Spanish labour law that rigid?

• Spain has been an ideal scenario to experiment

Conclusions• High unemployment levels brings

employment conditions and standards down AND It its establishing the premise that in order to create employment, it is necessary to make it cheaper

• The perception of precariousness as the rule has a demobilizing effect which also disrupts and fragment the working class interests

Conclusion

Beyond the problem of unemployment, a solution for precariousness is absolutely needed • From the establishment is launched the proposal of a

single contract (with compensation linked to seniority)• From trade unions: derogating last labour law reforms;

creating “employment plans” as well as recovering public services and rehiring public employees.

• From scholars: the “Job Guarantee” or “Employer of last resource” which is being theorized by many critical economist, labour law experts and sociologist