Spain: Labour market instability among young people

A recent article by the Foundation of Savings Banks highlights the vulnerable position of young Spanish people on the labour market, in terms of difficult access to employment, poor transition from education into work, high prevalence of precarious work, and lack of social protection rights.

Introduction

In January 2016, the Spanish Foundation of Savings Banks (Funcas) published an article in its Social Outlook journal entitled 'Intensification of labour instability among young people in Spain'. It looked at the impact of the economic crisis on young people and how this could affect intergenerational solidarity, which is at the heart of the welfare society. It also opened the debate on whether the challenge to support young people should be met by families or addressed through public policies. 

Main findings

Slow transition from education to the labour market

In Spain, both the number of early school dropouts and the number of university graduates are higher than the corresponding European averages. According to Eurostat data, 20% of those in Spain aged 18–24 were considered to be early leavers from education and training in 2015, whereas in the EU28 the average percentage was 11%. Eurostat data for Spain in 2015 also show that, for young people aged 15–29, 27.7% of them had attained tertiary education levels, whereas the average for the EU28 was 22.7%. Young people with low qualifications are most affected by the economic recession. This been the case in Spain since 2008, with a fall in production levels in sectors such as construction, where there is a predominance of low-qualified workers.

From the late 1990s to 2007, the growth of the Spanish economy was based partly on the productive sectors of a low-qualified workforce such as the construction sector, which attracted young people who wished to leave school and start working. Not surprisingly, the economic crisis (particularly the crisis in the construction sector), drew many young people back to education. The school dropout rate decreased significantly in the period 2007–2014 from 30.8% to 21.9% (although it is still high compared with the European average of 11.1%).

However, many young people with university degrees suffer from over-qualification or sub-occupation, which means that they occupy posts that, in practice, require lower qualifications than those they possess. According to the Observatory of the Emancipation of the Spanish Youth Council , in the fourth quarter of 2014 sub-occupation affected 56.3% of salaried workers aged 16–29 who were not studying (an 8.7% increase compared with 2013).

Spain has traditionally had low numbers of graduates with secondary level degrees. Reforms applied in 2006 by the then Prime Minister José Luis Zapatero and, in 2013, by Prime Minister Mariano Rajoy tried to make secondary level degrees more flexible and more accessible, but results have been very limited.

Inherent difficulties in the Spanish labour market

The reforms carried out at the end of the 1990s and during the first decade of the 21st century have accentuated the differences between stable workers (the so-called ‘insiders’, that is, those workers with stable and well-remunerated jobs, which give them present and future rights) and those workers with a precarious presence in the labour market (the so-called ‘outsiders’, that is, those with unstable jobs, low salaries and limited rights). The segmentation and duality of the Spanish labour market have been aggravated by the current economic crisis. Most young people are part of the outsiders group, which makes them particularly vulnerable.

According to Eurostat data, since the beginning of the economic crisis, Spain has had one of the highest youth unemployment rates in Europe (38.9% in 2014, for those aged 15–29). The economic crisis has particularly affected young workers who are looking for their first job, or those who have already had a job but have worked under precarious conditions. Unemployment rates are particularly high among the youngest groups. Data from the Spanish Labour Force Survey (EPA) show that, in the first quarter of 2015, the unemployment rate was 70.5% for individuals aged 16–19, 47.7% for individuals aged 20–24, and 30.2% for those aged 25–29.

One of the main consequences of the exclusion of young people from the labour market is their difficulty in accessing social protection rights. As Spanish labour legislation has traditionally protected stable workers with open-ended contracts, companies have adjusted employment levels according to the ‘last hired, first fired’ principle. Dismissing a young employee with a temporary contract is relatively cheap in Spain. In addition, the main requisite for receiving unemployment benefits in Spain is having contributed to the social security fund for at least 12 months in the previous 6 years (that is, having worked for at least 12 months), which is a difficult requirement for many young people to meet .

However, there is a significant intergenerational salary gap. Approximately one out of four workers under 25  has a low-paid job (that is, a job with a salary which is lower than two-thirds of the average income in the country). The high costs involved in dismissing older workers (who normally enjoy stable indefinite contracts) provide them with considerable advantages in collective bargaining, whereas young people cannot exert so much pressure. The economic crisis has aggravated this model of ‘vertical hierarchy’. Thus, according to the Salary Structure Survey, published by the Spanish National Institute of Statistics (INE), salaries have decreased as follows in the period 2008–2013:

  • 19.7% for the group aged 20–24;
  • 10.6% for the group aged 25–29;
  • 5.2% for the group aged 30–34.

Meanwhile, the adult population has maintained stable salary levels, or has even increased them by 1% or 2%.

Social implications

The article highlights how the current configuration of training and labour systems is putting at risk the transition of young people in Spain into adult life, as they need employment stability and a decent salary to leave home.

Since the beginning of the crisis, the emancipation rate has not maintained the same rising trend experienced at the end of the 1990s; rather, it has diminished for the age group 20–24 and stagnated for the age group 25–29. According to the Observatory of the Emancipation of the Spanish Youth Council, this is caused by the high growth in unemployment rates.

Delays in the creation of new households are linked to the fact that many young people choose to stay longer at home with their parents, in order to face the challenges of the labour market. In addition, and as a consequence of the economic crisis, the risk of youth poverty increased from 18.3% in 2009 to 27.6% in 2014. According to 2014 OECD data on income inequality, Spain is one of the developed countries where young people’s income has decreased the most (4.9% between 2009 and 2014).

Given that the opportunities for entering the labour market are very limited in Spain, increasing numbers of qualified young people are willing to work abroad. Available figures show that in 2015 there were 263,000 young people aged 25–34 living abroad, compared to 185,000 in 2009 (although these figures are not fully reliable because there is no compulsory register listing all those who emigrate).

Conclusions

The article highlights the vulnerability of young people in Spain in terms of their situation in the labour market. In the first quarter of 2015, the unemployment rate was:

  • 70.5% for individuals aged 16–19;
  • 47.7% for individuals aged 20–24;
  • 30.2% for those aged 25–29.

Moreover, in the fourth quarter of 2014, sub-occupation affected 56.3% of salaried workers aged 16–29 who were not studying. There is also a significant intergenerational salary gap, and around one out of four workers under 25  has a low-paid job.

The weaknesses of the public social protection system and the difficulties of the productive, economic and financial systems in Spain mean that, to some extent, families guarantee the welfare of their own members. Spain – and southern Europe in general – is characterised by this ‘intra-family solidarity’ which is at the basis of social cohesion, and is the means by which adults offer support to both their children and their older relatives. The article points out that while the Spanish Welfare State has developed different public systems  such as the public pension system, public health system or unemployment benefits  aimed at protecting vulnerable groups, a system that protects young people finding it hard to access the labour market is still pending.

This situation hampers the transition of young people into adult life while, at the same time, damages the demographic balance of Spanish society and results in its progressive ageing, as birth rates keep on falling as a result of the lack of employment opportunities.

Finally, as for the current debate on this issue in Spain, it must be said that the labour conditions experienced by young people are a priority for Spanish trade unions. The unions have launched campaigns to fight against the disadvantageous position of young people, they have published reports highlighting their unfavourable conditions in the labour market and they have organised awareness-raising conferences and workshops. To give some examples, recent data from the General Workers’ Union (UGT) show that young people are particularly affected by precarious working conditions, whereas an article published by the Trade Union Confederation of Workers’ Commissions (CCOO) demands that the Spanish government should show more awareness of the situation and take further action to support Spanish young people.

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