Incentives to reduce working time and create employment in Catalonia

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At the beginning of October 1998, a decree issued by the Catalonian regional government on incentives to create new jobs arising from the reorganisation and/or reduction of working time came into force. This fulfils one of the commitments in the "Pact for employment in Catalonia" signed by the administration and the regional social partners.

On 13 May 1998, the regional government (Generalitat) of Catalonia and the main Catalonian employers' organisations and trade unions signed the Pact for employment in Catalonia (Pacto por el Empleo en Catalunya), 1998-2000 (ES9805154F). This was the first such regional pact to be signed in the European Union following the special "Employment Summit" European Council meeting held in Luxembourg in November 1997 (EU9711168F), which resulted in the EU Employment guidelines for 1998

One of the main obstacles in the negotiation of the Pact was the question of shorter working time and job creation. For the unions, it was essential to reach an agreement on this subject, but the employers' associations had strong reservations. A compromise solution was finally reached, by means of which the Pact gave the social partners a period of one month to reach a formal agreement on job creation and working time. Otherwise, the Catalonian government would draw up an appropriate decree.

As was to be expected, the social partners did not reach an agreement and the Generalitat drew up a decree, which came into force at the beginning of October 1998.

The decree follows the criteria laid down by the Pact and is designed to:

• promote the net creation of jobs based on agreements in companies to reorganise and/or reduce working time, including overtime;

• promote secure employment through assistance aimed at new permanent contracts, both full-time and part-time;

• ensure that participation by companies is voluntary; and

• ensure the participation of workers' representatives in the implementation and monitoring of the agreements.

The decree establishes that financial assistance for new permanent contracts will amount to 40% of the monthly employers' social security contributions. For groups of job seekers that already receive incentives from central government because they find it especially difficult to enter the labour market, assistance is limited to either 20% or 25%, according to circumstance. The maximum duration of assistance will be two years from the date of signing contracts during the period of validity of the Pact. This assistance is payable only if there is an agreement between the company management and workers' representatives on reducing and/or reorganising working time, including overtime.

This decree opens up an innovative route that may be taken by regional governments to foster shorter working hours and job creation. It is far more ambitious than the action being taken by the government of the Basque Country (ES9707116F), and sets an example that may be followed by other Spanish autonomous communities. However, the Catalonian regional government has not yet announced details of the funding that will be allocated to these measures - a key indicator of the extent of its commitment.