Impact of the April Agreements on job security in Spain
The Spanish trade unions and employers' organisations which signed the important labour market reform agreements in April 1997 (the "April agreements") have carried out a review of their results over the first six months, which was published in January 1998. The social partners agree in general that the results are positive, but have reservations on some points.
In April 1997, trade union confederations and employers' organisations signed a set of three intersectoral agreements - entitled For employment stability, On collective bargaining and On filling the gaps in regulation- constituting a major reform of the Spanish labour market (ES9706211F). In January 1998, the organisations which signed the "April agreements" published a review of their results, based on figures covering the period from June to November 1997. The review, which was carried out by the General Workers' Union (Unión General de Trabajadores, UGT), the Trade Union Confederation of Workers' Commissions (Comisiones Obreras, CC.OO) and the Spanish Confederation of Employers' Organisations (Confederación Española de Organizaciones Empresariales, CEOE), covers two of the main issues contained in the agreements - the reduction of insecure employment and of labour turnover, both of which are considered socially and economically negative.
A year of expanding employment
It should first be noted that 1997 was a relatively good year in terms of employment in comparison with the immediately preceding years: the numbers of employed people increased by 335,000 in comparison with 1996. The main reasons for this increase were an unexpectedly high increase in Gross Domestic Product and fewer job losses in agriculture than usual. Another reason is that companies received grants to create permanent employment, and were able to continue creating temporary employment in identical conditions to the previous period.
Nevertheless, the effect on the rate of unemployment has been less than expected. The reduction in unemployment was lower than in previous years. In 1997 the number of unemployed fell by 140,000, whereas in 1996 it fell by 173,000 and in 1995 by 198,000. However, to equal the average employment rate of the EU, more than two million Spanish men and women will have to join the labour market or come out of the hidden economy that employs hundreds of thousands of them.
Characteristics of new contracts
Limited progress has been made on the topics dealt with under the April agreements. The number of employment contracts entered into until November 1997 was 6,108,926 (almost 800,000 more than in 1996). Of these, 8.5% are permanent and 91.5% temporary. The gulf between these two types of contract is still enormous, but in 1996 the percentages were respectively 3.9% and 96.1%. The key to success lies in the consolidation of this trend over the next few years.
It is interesting to consider the characteristics of those workers who obtained permanent contracts. Of the two main groups considered in the April agreements, the new workers with permanent contracts tend to be those who previously had temporary contracts (73%) rather than long-term unemployed people (27%). Therefore, unemployed people are less favoured. Also, men are more favoured than women. Indeed, though women represented 45% of the people who could benefit from permanent contracts, only 32% of the new secure contracts went to them, against 73% to men. In terms of age, the young did better, particularly the 25-30 age group, followed by the 19-24 age group. The effect on people at both ends of the age scale was considerably lower. Also, industrial workers were relatively more favoured than those in other sectors. However, the least qualified workers were the most favoured because they are the workers whose employment situation is the least secure. (The data come from a report by the Technical Office of CC.OO - Gabinete Técnico de CC.OO- based on information published by INE, INEM and MTAS.)
Although the fight against insecure employment has been a relative success, the same cannot be said for labour turnover. If we bear in mind the increase in the working population pointed out above and relate it to the total number of contracts, it must be concluded that labour turnover is as high as in the previous year because temporary jobs have increased proportionally more than the number of wage-earners. Of course, many of the contracts were for jobs that appeared and disappeared during the year rather than for secure jobs for which one contract followed another. The trade unions are aware that this is the case and that little progress has been made in this area.
Reasons for change
The social partners and the Government have repeatedly stated that the increase in permanent contracts is due to a decisive factor: the grants that these contracts have received from the Government. These grants have a two-year duration, starting from May 1997, which means that only after this period will it be possible to assess the true effects of the April agreements. It is certainly to be hoped that after holding a steady job in a company for two years many workers will consolidate their status, either because they have improved their training or because they have become indispensable to the company, but for the moment it is impossible to know.
It should also be stressed that these grants are active employment policies that may be of greater value to unemployed people and workers with insecure jobs than certain passive policies or external supports (such as subsidies or training courses). But though trade unions and employers' organisations agree with the policy of grants, they express some doubts about their continuity. Employers want the grants policy to extend to reductions in their social security contributions, arguing that they are such a burden to small companies that they prevent them from creating employment.
The unions are against reducing social contributions, since this would introduce serious problems into the pensions system that would have to be solved through the state Budget, which would itself lead to further problems. They claim that companies continue to use temporary contracts unjustifiably: for example, they use inappropriate types of contract (great use is made of temporary contracts and "contracts for production circumstances") or they draw up contracts for shorter periods than those allowed under current legislation. The unions are therefore in favour of economic sanctions to counter such abuses, arguing that this would reduce the number of inappropriate contracts and that the funds generated could be used to stimulate employment.
Over and above all this, the unions still think that in an economically good year the employers and the Government have done little for employment.
1997 came to an end with a temporary employment rate of 33% of the labour force, practically the same as in 1996. Therefore, the greatest area of concern remains how to reduce a temporary employment rate that is still so high in comparison with the rest of the EU. It seems evident that the remedy can come only from a labour policy that is even firmer in offering greater protection of certain minimum guarantees: duration of contracts, rights of temporary workers, greater responsibilities for workers' committee s and so on. In other words, the same conditions as exist in many countries of the EU.
Furthermore, the measures adopted in the 1997 agreements show limitations that must be thoroughly studied. From what we can see, they continue to discriminate against women and offer only partial solutions to long-term unemployment. It would perhaps be important to introduce corrective measures in this respect. However, the main need is for a greater commitment to employment by those who can create it at the end of a year in which company profits have increased considerably. (Faustino Miguélez, QUIT)