Spain: Latest working life developments – Q3 2017

The debate on salary increases, an agreement between the government and unions on the creation of public employment, and the Prepara Plan for the long-term unemployed are the main topics of interest in this article. This country update reports on the latest developments in working life in Spain in the third quarter of 2017.

Debate about increase in salaries

The Spanish macroeconomic context is finally improving after years of crisis. The Minister of Employment and Social Security, Fatima Báñez, announced in early July 2017 that it was time to increase salaries but, so far, little has happened. In September 2017, data published by the National Institute of Statistics (INE) indicated that the volume of salaries over the total Spanish GDP has decreased from 52% in 2008 to 48% in 2016, which reflects the change in the distribution of wealth during the crisis.

GDP grew by 3.4% in 2015 and by 3.3% in 2016, and it is following the same trend in 2017 – although employment levels are increasing by around 3% per year. However, the Quarterly survey on labour costs (PDF), published by the INE, shows that monthly salary costs per worker decreased by 0.1% in the first half of 2017. Furthermore, according to an article published by the Savings Bank Foundation (Funcas), the salaries of people under the age of 26 who entered the labour market in 2015 were 14.4% lower than the salaries of young people on similar contracts in 2008 (PDF).

Negotiations broke down on the reference agreement for salary increases in 2017. The social partners involved were the Workers’ Commissions (CCOO) and the General Union of Workers (UGT); the Spanish Confederation of Employers’ Organisations (CEOE) and the Spanish Confederation of Small and Medium-Sized Enterprises (CEPYME). The talks failed at the end of July, despite several proposals and approaches. The main hurdle was that trade unions would not budge on their aim of introducing wage guarantee clauses linked to inflation, so as to ensure the recovery of workers’ purchasing power – with employer organisations totally against it. In September, after the holiday period, social partners resumed negotiations, but are now looking at a deal for 2018.

There was also some progress on civil servants’ salaries. In September, the Spanish government proposed to trade unions that civil servants’ salaries could increase by up to 7.25% in 3 years. Some of the increase would be variable, linked to GDP (up to 0.75% per year), with a suggestion for fixed increases at the level of 1.5% in 2018, 1.75% in 2019 and 2% in 2020. This proposal was still being studied by trade unions at the end of the third quarter.

Agreement on public employment offer

At the beginning of July 2017, representative trade unions UGT, CCOO and the Central Independent Trade Union and of Officials (CSI-F) and the Ministry of Finance reached an agreement on a large public employment drive. This would make the 2018 General Budget the first to create public posts in net terms since 2009: reposition rates (coverage of ‘empty’ posts due to leaves and retirements) would increase by 100% for ‘priority services’ and by 75% for ‘non-priority services’; and public opportunities would be announced so that temporary posts that have existed as ‘provisional’ for the last three years can be offered as permanent career civil servants’ posts.

The implementation of this agreement is subject to the approval of the 2018 General Budget, which at the end of September 2017 was still pending, as a result of the internal political instability derived from the call for an independence referendum in Catalonia.

Prepara Plan and measures to support youth employment

In September 2017, the Spanish government announced the extension of the Prepara Plan, a re-qualification programme for unemployed people who have exhausted all other forms of state benefit. The plan pays €450 per month to the long-term unemployed who have the greatest family burden, and €400 per month to all other unemployed individuals.

The Prepara Plan, initially approved in February 2011, was managed centrally by the state-level public employment service. Its duration has been extended since then on several occasions. The last extension expired in August 2017 and, at the end of July 2017, the Constitutional Court ruled that this type of support should be managed directly by autonomous communities, using the powers transferred to them. The Ministry of Employment then agreed with all the autonomous communities a temporary extension of the plan, to be overseen by central government until April 2018. In the meantime, the government, the regional governments and the social partners, will try to revise and integrate all the support programmes for the long-term unemployed, with the aim of creating a more efficient single programme, managed directly by the autonomous communities.

In September 2017, the Spanish government and the social partners were also negotiating several measures to support youth employment, including more flexible hand-over contracts for young workers to replace retiring workers, and a salary complement for young workers. These measures were approved by the Spanish government in Royal Decree-Law 15/2017, together with the extension of the Prepara Plan, on 6 October 2017.

 

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