New government sets out main lines of employment policy

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In May 2004, the Minister for Labour and Social Affairs in Spain's new Socialist government presented the main lines of its employment and industrial relations policy. The priorities include limiting the levels of of temporary employment, cutting the costs of open-ended contracts, enhancing the training system and increasing the minimum wage.

In April 2004, following the general election in March (ES0404102N), a new minority Socialist Party (Partido Socialista Obrero Español, PSOE) government entered office, led by Prime Minister José Luis Rodríguez Zapatero (ES0405202N). The Minister for Labour and Social Affairs in the new administration is Jesús Caldera, and in May he presented the main lines of the government's policy on employment and industrial relations issues. The main priorities are to limit the levels of temporary employment, promote social dialogue and adapt the system of training, with the aim of creating a model of 'flexi-security' and activation of the workforce.

The Minister stated that the economic policy pursued by governments over the last decade - those of both the PSOE and the conservative People's Party (Partido Popular, PP) - has generally been appropriate, and that it is now necessary to take advantage of economic advances and correct certain imbalances that may threaten the general progress. According to the Minister, Spain's economy is one with an 'intermediate degree of development and level of costs', in the context of the inclusion in the EU since 1 May 2004 of 10 new Member States with considerably lower labour costs and in some cases a technologically similar production system. The emphasis must therefore now be placed on education and training, research, technological development and raising the levels of capitalisation of the Spanish economy.

In terms of employment, the main imbalances identified by the Minister are:

• a model of flexibility based on a high temporary employment rate and the abuse of subcontracting ( ES0405107F ), which is also one of the reasons for the high industrial accident rate ( ES0212205F );

• the weakness of employment policies;

• the low level of development of 'human capital' ; and

• inflexible working hours.

In order to overcome these problems, the minister proposes the following measures:

• bringing the cost structure of open-ended employment contracts in line with that of temporary contracts by providing incentives for the former and increasing the social security contributions in respect of the latter;

• as seasonal work is a foreseeable phenomenon, promoting the use of open-ended part-time contracts and 'fixed-discontinuous' (fijos discontinuos) contracts - ie contracts which are open-ended but involve work only at particular times of the year - for such work;

• preventing subcontracting involving recruitment 'for works and services' and successive subcontracts;

• clarifying the legal obligations and responsibilities of subcontractor companies and strengthening their workers' rights to representation and collective bargaining;

• revising the way in which various employment contracts are used and underlining the need to justify the use of temporary contracts, in order to prevent temporary employment from being used as a probationary period. A greater intervention of the Labour Inspectorate ( Inspección de trabajo ) is foreseen in this area, though in a 'non-punitive' spirit, in connection with other bodies such as the Public Employment Services ( Servicios Públicos de Empleo , SPE) and the social security authorities;

• providing that a certain proportion of workers provided by temporary work agencies are employed on open-ended contracts;

• reducing temporary employment in the public administration ( ES0311206F );

• setting up an expert committee to examine the results of recent labour market reforms;

• addressing the fact that in many regions there is 'technically full male employment' coexisting with pockets of unemployment caused by low levels of employability. The Ministry will foster active employment policies, the SPE will be given more funding and be better coordinated, and an Agency for Quality in Employment ( Agencia de Calidad en el Empleo ) will be set up with the task of evaluating employment and vocational training policies. There will be improved unemployment protection for groups who find it difficult to enter the labour market and an 'integration commitment' will be introduced, creating mutual obligations between the SPE and unemployed people in order to get the latter into work;

• reforming vocational training, linked to the National Qualifications System (Sistema Nacional de Cualificaciones), and including training for unemployed people in the continuing training system, while maintaining the participation of employers and workers in the system ( ES0310110F ). The regions will manage part of the training funds, but a proportion will be assigned for the central administration to develop sectoral and multisectoral policies. Temporary loans will be made available for vocational retraining;

• the Labour Inspectorate will be reinforced to improve occupational risk prevention. The regulatory framework for mutual insurance to cover industrial accidents and occupational illnesses will be revised, and preventive research programmes will be conducted in companies;

• the national minimum wage (Salario Mínimo Interprofesional, SMI) will be increased by 6.6% to EUR 490 from 1 July 2004 ( ES0406204N ), and will reach EUR 600 at the end of the government's term of office. Furthermore, adjustments in social security benefits - including unemployment benefit, in line with a recommendation from the Trade Union Confederation of Workers’ Commissions ( Comisiones Obreras , CC.OO) - will no longer be linked to the SMI. Instead, for this purpose a 'public benefits indicator with multiple effects' (Indicador de Rentas Públicas con Efectos Múltiples) will be created, initially set at EUR 460 per month; and

• long-term flexible working time (without a reduction in hours) will be promoted, responding to the needs of both production and employees and their families.

In summary, the various types of employment contract will be more closely controlled, the costs of open-ended contracts will be reduced and those of temporary contracts increased. This will involve a convergence that some commentators see as generalising a type of 'semi-stable employment', accompanied with a more intense policy of activation of the workforce.