Government earmarks public money to subsidise employment contracts

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The Spanish government's decision in September 1998 to increase subsidies for stable employment contracts, along with a proposal to negotiate a reduction in the existing subsidy for temporary jobs, have led to a dispute. Trade unions are against subsidies without guarantees of secure employment, or at the expense of further deterioration in unemployment insurance. The employers' organisations, meanwhile, are reluctant to accept a reduction in any subsidies.

In the first few days of September 1998, the Spanish government adopted several measures aimed at encouraging stable job creation by means of public subsidies. The first measure allocated PTA 2.5 billion towards promoting stable work contracts for women in sectors in which they are poorly represented, by financing 60% of their social security contributions. The second allocated PTA 306 billion of the National Institute for Employment (Instituto Nacional de Empleo, INEM) budget towards promoting stable work contracts of all types. The third aimed at subsidising permanent part-time contracts.

The employers' organisations have expressed their satisfaction with these measures, but the positions of the CC.OO and UGT trade union confederations is more complex. They support the first measure - which was already contained in the social partners' April 1997 central agreements (ES9706211F) - though believing that it does not go far enough. They oppose the second measure because the funds will come mainly from a reduction in the budget allocated for unemployment insurance. They also oppose the third measure and propose as an alternative subsidies for reducing working hours. This raises once again the question of the direction of employment policies. The government state that the type of measure it proposes will reinforce active employment policies rather than passive ones. The unions also favour active policies but believe that companies are being subsidised without sufficient control, and that the minimum levels of social welfare for unemployed people are being threatened.

The government proposals on the use of public money for the regulation of the labour market also have a second aspect: an increase in social security contributions in respect of temporary contracts. Since the labour reform brought about by 1997's "April agreements", CC.OO and UGT have repeatedly stated that one of the ways to reduce the high rate of temporary employment is to make it more expensive for companies, since temporary employment is encouraged by its lower, subsidised social costs. The government now seems to have accepted this notion, and wishes to propose it to the social partners. It seems likely that the employers' organisations will reject the proposal, since they recently expressed their opposition to it. Furthermore, CC.OO and UGT insist that what is required is an employment plan with sufficient public funding aimed at creating secure employment.

For some observers, it seems obvious that public funding must give priority to active employment policies. However, guarantees must ensure that this money really serves to create stable employment, as it would be unfair if such policies meant that society abandoned those who were unable to find employment.