Spain: Latest working life developments – Q2 2016

A small rise in employment, the issue of pensions, and efforts to form a new coalition government in the wake of the June General Election are the main topics of interest in this article. This country update reports on the latest developments in working life in Spain in the second quarter of 2016.

Slight increase in employment but effects of crisis still evident

There was a slight increase in employment at the beginning of 2016 in Spain. According to data from the Spanish Labour Force Survey (PDF) , in the first quarter of 2016 the inter-annual change in total working population was +3.29%. In the second quarter of 2016, the total number of unemployed fell to less than four million for the first time since August 2010. The latest social security statistics show that at the end of June 2016, the number of affiliated workers was half a million more than for the same period in 2015. During the 12 months to June 2016, the number of unemployed fell by 350,000 to 3,767,054. This is good news for the Spanish labour market.

However, employment creation is concentrated on activities with low salaries, mostly in the tertiary sector. In 2008, 66.5% of the total working population was working in service-related activities; in 2015 this percentage had increased to 76.2%. A survey on salary structure, conducted by the (National Institute of Statistics (INE)) shows that salaries in service-related activities such as commerce and the hotel and restaurant sector have traditionally been below average. At the same time, unions say that there has been significant salary devaluation in the Spanish labour market since 2010 and an analysis by the General Workers’ Union (UGT) suggests this goes hand in hand with worsening working conditions. A report on overtime (PDF) by the Trade Union Confederation of Workers’ Commissions (CCOO) shows that the proportion of non-paid overtime compared to total overtime increased from 39% non-paid overtime in 2008 to 56% in 2015.

In addition, the ILO has recommended that Spain should increase its minimum salary by 10%. It currently stands at €655.2 a month (€9,172.80 a year).

Population ageing and the issue of public pensions

The ageing of the population is one of the biggest challenges facing the Spanish economy in coming decades. Both employer organisations and trade unions are warning public administrations that Spain’s ageing demographic makes the current social security system unsustainable. Different experts and stakeholders have published estimates of how social security income and costs may evolve, and there have been proposals to solve the current system deficit. For instance, the Spanish Confederation of Employer Organisations (CEOE) has published a report on population ageing and its effects on the Spanish labour market (PDF). Meanwhile, both CCOO and UGT have asked that the ‘spirit’ of the ‘Toledo Pact’ is taken up again in order to reach agreement among all political and social stakeholders. This pact was an ambitious reform of the Spanish social security system approved by the Spanish parliament in 1995, based on a broad social arrangement. Against this background, it seems that the new government formed in Spain after the June elections will have to take action in this field.

Ongoing talks in wake of second general election

On 26 June 2016, national general elections were held again because it had proved impossible for any coalition to form a government after the December 2015 elections. The Popular Party achieved a clear victory in the June elections but, with 137 seats, fell short of the 176 seats required for a parliamentary majority. While the position of the Popular Party has been strengthened, it must now try to form a government with broad-based support and will need to begin talks with possible allies. It will also need to reach agreement on key issues, particularly on social and economic questions. This includes the labour market since the 2012 reforms have been severely criticised by other parties and trade unions.

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