EMCC European Monitoring Centre on Change

Spain: Young people and temporary employment in Europe

  • Observatory: EMCC
  • Topic:
  • Published on: 08 December 2013



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In Spain, young people occupy a particularly disadvantaged position in the labour market. In addition, the crisis has had a great impact on young workers. The unemployment rate for workers between 16 and 25 years old is almost double that of the whole population. At the same time, young workers are more likely to work under fixed-term contracts (more than 60% of young workers are hired on a fixed-term contract). The main measures enacted during the economic crisis to support the employment of young people have been focused on reforming training and work experience contracts in order to foster their use and to encourage their recruitment by reducing the labour costs associated with their contracts. In light of this, it can be stated that the measures undertaken try to reduce unemployment among young people rather than to foster stable employment.

Introduction

Youth unemployment has been a persistent problem in many parts of Europe for many years. Over the past 3-4 years, however, since the onset of the financial crisis and the economic recession which followed, it has become an even greater and more widespread problem and one which, given the on-going depressed state of the European economies, is likely to remain for some time to come. The latest monthly figures (for September 2012) show the unemployment rate of those aged 15-24 averaging 22.8% in the EU – just over 1 percentage point higher than at the time a year earlier. In Spain, the figure was over 54% and in Greece, 57%, in both cases, much higher than a year earlier. In the worst affected countries, therefore, as in most Member States, there is very little sign of any easing of the youth unemployment problem. There are, however, a few exceptions. In Germany, in particular, youth unemployment has declined since the global recession hit in 2009 and now stands at only 8%, well below the level it was before the recession. In Norway too, the rate is only 8%, though this is slightly above the level in 2007 before the crisis. Germany, apart, there are two other countries in the EU with youth unemployment below 10% according to the latest monthly figures - the Netherlands (9.4%) and Austria (9.9%). As in Norway, in both cases, the rate is above the pre-crisis level.

Moreover, young people who do manage to find jobs often have to settle for a temporary one, defined as one with a fixed-term contract of employment. According to the European Labour Force Survey (LFS), in 2011, just under 43% of employees under 25 were in temporary jobs in the EU and well over half in Germany (56%), France (55%), Portugal, (57%), Sweden (57%), Spain (63%), Poland (66%) and Slovenia (75%). (In Norway, the figure was much lower than in most EU countries, at around 24%.) While around 40% of the young people concerned on average were in temporary jobs because they had a fixed-term training contract and another 9% were on probationary contracts, a substantial proportion (37% on average) were in temporary jobs because they were unable to find permanent ones. In the Czech Republic, Cyprus and Portugal, this figure was over 75% and in Spain and Slovakia, well over 80%.

Among young people making the transition from education or initial vocational training into employment, the proportion who take up temporary rather than permanent jobs is much higher than for the age group as a whole. In 2011, 57% of those aged 15-24 in employment who were in education the previous year were in temporary jobs in the EU and 86-87% in Spain, Portugal and Poland. For those moving from unemployment into employment, the proportion who take up temporary jobs is even higher on average in the EU (61%) as well as in Spain (90%).

The fact that a relatively large proportion of young people in employment are in temporary jobs may be a reason why they have been hit disproportionately hard by the crisis. In the economic downturn in 2009, many of the people who lost their jobs first were on fixed-term contracts since not renewing these contracts represented the easiest way for employers to reduce their work forces. In 2009, therefore, there was some decline across Europe in the proportion of young people in work employed in temporary jobs (see the Tables attached to the questionnaire). Since then, there has been some tendency for the proportion to increase again, in part perhaps because employers are reluctant to take on people on permanent - or standard – contracts given the uncertainty about future economic prospects.

Given the above, it is understandable that there is growing public interest, and some concern, over the nature of the jobs that young people are taking up. This concern is mirrored at EU-level where a ‘flexicurity’ approach to labour market policy has increasingly been advocated, which, in practice, means that while flexibility is an important objective, it needs to be accompanied by protection of workers’ interests if it is not to lead to a growth of precarious employment in low quality jobs. Accordingly, there is a need to obtain a better understanding of the terms and conditions applying to temporary jobs, the extent to which they are a stepping stone to permanent jobs and a working career in line with a person’s qualifications and capabilities, the access to social protection which comes with them and the measures in place to encourage employers to convert them into more stable jobs. These issues form the focus of the present study.

Definition of temporary jobs

The interest in the study is in all young people employed in temporary jobs of whatever kind, in the sense of all jobs that they are not subject to a standard contract of employment which is normally one of indeterminate length, or at least one for which no specific length is specified. Such temporary jobs can be for a period of training (i.e. traineeships or apprenticeships) or probation, intended to enable employers to check the suitability or aptitude of people for the jobs concerned. They might also be to replace someone on maternity leave or on a training programme or they might relate to a specific project of fixed duration.

All such jobs and others which are of fixed duration should be covered, whether they are part-time or full-time and irrespective of whether they are specifically for young people (such as perhaps in the case of traineeships or apprenticeships) or for people of all ages which young people happen to be doing. In some cases, it should be noted, it is relevant to include, in addition, to temporary employees, the ‘bogus’ self-employed – i.e. those people who have self-employment status but who are contracted to work for a single employer and who are effectively similar to employees who have a fixed-term contract of employment. (The cases in question relate to instances where employers use self-employment contracts as a means of employing young people without bearing the costs, and obligations, of a standard contract of employment.)

Outline of study

The study is divided in three sections. The first is concerned with the main types of job in which young people who are employed under temporary contracts work and the reasons why employers choose to use temporary contracts of employment instead of standard ones when they take on young people, as well as with the link, if any, with labour market conditions (i.e. with the extent to which the crisis has led to an increase in temporary employment). The starting point is the data summarised above, derived from the LFS, which indicate the relative number of young people employed on temporary contracts in the different European countries and the way that this has changed over the recent past (these data, as noted, are set out in the tables attached to the questionnaire). Correspondents are asked to check these data against any national data on temporary employment and to indicate where these show a different picture from the LFS data, perhaps because a different definition is adopted of temporary jobs.

Any description or commentary on national statistics should, however, remain brief, since the main task of the first section, is to review and summarise relevant sources of information on the different kinds of temporary contract under which young people are employed in each of the countries, the circumstances and areas (the types of job and the sectors of activity) in which they tend to be used and the main reasons why employers adopt them.

The second section is concerned with the access to social benefits which temporary jobs provide, distinguishing between the various kinds of benefit, and with the extent to which entitlement to benefit differs for young people employed in temporary jobs from that for those employed under standard contracts of employment. It should be emphasised that the concern is not only with the formal regulations which apply, which in many if not most countries do not make a formal distinction between temporary jobs and others, but also with de facto entitlement which stems from the nature of temporary employment. In particular, young people in temporary jobs may have difficulty in complying with the need to have a continuous period in employment, or a continuous record of paying social contributions, in order to be eligible for unemployment benefit.

The third section is concerned with the measures in place to regulate the use of temporary contracts of employment (such as specifying the number of times they can be renewed), with the attitudes of government and the social partners towards their use and with the incentives which exist to encourage the wider use of standard contracts of employment and the conversion of temporary jobs into permanent ones. A particular point of interest is the extent to which regulations and attitudes as regards temporary jobs have changed over the crisis period as the number of jobs available for young people to take up has diminished and as expanding these has become a policy priority.

A final point to note is that while it is customary to define youth employment (and unemployment) in terms of those aged 15-24, it is also the case that many of those aged 25-29 are also employed in temporary jobs, as indicated in the attached tables. Correspondents are therefore asked to extend the coverage of the study to this age group where relevant. It is recognised that in some countries the statistics available may not relate precisely to the age groups specified here, in which case correspondents should report on the age groups nearest to these.

Questionnaire

1. Importance of temporary employment for young people

1.1. Do the figures shown in the attached tables (on the number of temporary employed as a % of total employees based on Eurostat LFS data) give a reliable indication of the scale of temporary employment among the young in your country and the way that it has changed over recent years? Are there young people employed in temporary jobs who do not show up in the Eurostat figures? Are there national statistics which show a different picture from the Eurostat data? If so, please indicate what they show and give the source of the data.

Yes, figures give a reliable indication of the scale of temporary employment among the young in Spain and the way it has changed over the years. Indeed, most studies about youth employment usually take figures form Spanish Labour Force Survey which is the statistical source which provides the data for Eurostat’s Labour Force Survey. .

1.2. Is there any evidence that other forms of employment are used as a substitute for temporary contracts, such as bogus self-employment where young people are contracted to provide services to a single work provider in a continuous manner so acting de facto as employees? If so, please give the source of the evidence and indicate the scale of the phenomenon in terms of the number of people concerned.

There is no evidence about the incidence of bogus self-employment among young workers as a substitute for temporary contracts. Moreover, it is worth noting that in Spain, self-employment tends to be concentrated in adult workers. Thus, 70% of self-employed workers are older than 40 years old (Rocha 2011).

1.3. Please list (and give summary details, i.e. purpose and duration of the contract) the most common contract types or contractual arrangements under which young people are employed on a temporary basis (such as for traineeships, apprenticeships, probationary periods, replacement of workers on leave or projects of a fixed duration). What is the relative importance of each type of contract or arrangement in terms of the number of young people employed under them?

1- Work experience contract (Contrato en Prácticas). The goal of this contract is to favor the transition from education to the labour market. It was enacted under the Royal Decree 1/1995, of 24 March 1995. It is aimed at workers who have obtained a vocational training degree or a tertiary education degree during the previous four years, or six years in case of disabled workers. The length of the contract must be between 6 months and 2 years, and the wage is 60% of the salary associated with that job in the first year and the 75% in the second year. Collective bargaining must determine the kind of occupations which can be developed under this contract, as well as the length of the contract (respecting the legal criteria). On the other hand, the retribution, which can exceed the legal minimum, can be defined in multi- and single-employer collective bargaining.

Since the beginning of the crisis this type of contract has been modified in order to broaden the collectives which can be hired and to make it more attractive to companies. Thus, the Law 35/2010 on urgent measures to reform the labour market enables young workers who have a professional qualification to be hired with this work experience contract. In addition, the time period from when the worker completed the vocational training degree or the tertiary education degree has been extended from four years to five years.

2- Training contract (Contrato de Formación). The aim of this contract is to favor the transition from unemployment to employment of young people with low qualifications and educational levels. Moreover, it has a training component which aims to improve the qualifications of the workers hired under this contract. It was enacted under the Royal Decree 1/1995, of 24 March 1995. This contract was aimed at people of between 16 and 21 years of age (or up to 24 in the case of the unemployed who enter a School workshop or an Employment workshop programme) and who do not have the required education level to be hired under a work-experience contract. The length of the contract was between 6 months and 2 years.

Since the beginning of the crisis this contract has received great attention, being subjected to different reforms. Reforms were initiated with the previous Socialist government, by means of the Royal Decree 10/2011. Under this reform, the contract started to be named “training and learning contract” (contratao para la formación y el aprendizaje), being defined as a “contract with full labour and social protection rights which combines paid work in a company with training which allows one to obtain a professional qualification”. The Royal Decree regulates the contract as it follows.

  • - Target group: people between 16 and 25 (before it was 21) years of age who do not have the required education level to be hired under a work-experience contract.
  • - Minimum length: one year (before it was six months)
  • - Training and education component: the worker must receive the education or training in a recognized training centre linked to the National Employment System. Training and education must be firstly geared to support the worker to obtain a compulsory education degree (ISCED 2) for those workers who do not have that degree
  • - Accreditation: When the contract has expired, the worker can ask the public administration to obtain a professional qualification
  • - Working time: it can not be longer than 75% of the maximum legal working time or the maximum working time established by collective bargaining

The Popular Party government has also reformed this contract. The Royal Decree 3/2012, later transformed into the Law 3/2012, introduces the following changes:

  • Age: unemployed up to 30 years will be able to be hired in periods where unemployment rates exceed 15%.
  • Length: the maximum length is extended from two years to three years
  • Training: the new contract stipulates that training can be is provided within the company rather than in a training centre
  • Working time: after the first year, working time is extended from 75% to 85% of the maximum legal working time or the maximum working time established by collective bargaining

Moreover, the reform establishes a discount in the contributions paid by the employer to the Social Security in order to encourage the use of this contract. Thus, companies which hire workers under this contract will have a discount of 75% which rises up to 100% if the company has less than 250 employees. If the companies transform the “training and learning contract” into an open ended contract, they will receive a discount equal to 1,500€ every year during three years. This discount increases up to 1,800€ in the case of women.

The work experience contract and the training contract are scarcely used.. Table 1 and 2 provide figures on the workers hired under these contracts for workers aged 15-19; 20-24; and 25-29 for the period 2011 and 2012 (second quarter). As it can be seen, these contracts are scarcely used, accounting in 2012 (second quarter) for 12% of the total temporary contracts for workers aged 16-19; 10% of the total temporary contracts for workers aged 20-24; and 8% of the total temporary contracts for workers aged 25-29

3- Work and service contract (Contrato de obra y servicio). This is a fixed-term contract which allows companies to hire a worker in order to develop an activity the length of which is uncertain. It was regulated in the 80s.Table 1 and 2 provide figures on the workers hired under this contract for workers aged 16-19; 20-24; and 25-29 for the period 2011 and 2012 (second quarter). As it can be seen, this contract is the most common temporary contract among young workers, accounting in 2012 (second quarter) for 28% of the total temporary contracts for workers aged 16-19; 38% of the total temporary contracts for workers aged 20-24; and 34% of the total temporary contracts for workers aged 25-29

4- Eventual contract due to production circumstances (Contrato Eventual por Circunstancias de la Producción). This contract allows companies to hire workers on a temporal basis in order to attend extra tasks or demands not foreseen. The maximum length is 6 months. It was regulated in the 80s. Table 1 and 2 provide figures on the workers hired under this contract for workers aged 16-19; 20-24; and 25-29 for the period 2011 and 2012 (second quarter). As it can be seen, this contract accounted in 2012 (second quarter) for 22% of the total temporary contracts for workers aged 16-19; 22% of the total temporary contracts for workers aged 20-24; and 20% of the total temporary contracts for workers aged 25-29

5- Replacement of workers on leave contract (Contrato de Interinidad). This contract allows an employer to temporary substitute a worker on leave. It ends when the worker returns to his/her job. It was regulated in the 80s. Table 1 and 2 provide figures on the workers hired under this contract for workers aged 16-19; 20-24; and 25-29 for the period 2011 and 2012 (second quarter). As it can be seen, this contract is scarcely used accounting in 2012 (second quarter) for 3% of the total temporary contracts for workers aged 16-19; 8% of the total temporary contracts for workers aged 20-24; and 11% of the total temporary contracts for workers aged 25-29

6- Open-ended contract of support to entrepreneurs (Contrato indefinido para el fomento de la emprendeduría). This contract was enacted with the Royal Decree 3/2012 in 2012. Albeit is formally an open-ended contract, the trial period within it lasts one year. Thus, during the first year, the employer is able to freely dismiss the employee hired under this contract. The contract is subject to discounts in contributions to the Social Security aiming at encouraging the recruitment of the unemployed between 16 and 30 years of age, unemployed older than 45 years old, and women in male-dominated sectors. Furthermore, newly-employed workers are able to supplement their wages with 20% of unemployment benefits. Thus, with this contract, the Government eliminates dismissal costs during the first year and, at the same time, it reduces direct and indirect wage costs. The amendments included during the discussion of the project law in Parliament have limited the use of this contract to periods where unemployment rates exceed 15%. The Labour Force Survey does not provide figures about this contract yet.

Table 1. Total number of young workers per type of temporary contract
 

16-19

20-24

25-29

 

2012QII

2011QII

2012QII

2011QII

2012QII

2011QII

Both sexes

 

 

 

 

 

 

Total

74,7

110,9

694,4

843

1625,2

1849,7

Temporary contracts: Total

58,1

90,4

410

489

663,9

771,1

Temporary: Eventual contract due to production circumstances

12,8

19

91,4

122,4

138,2

139,5

Temporary: work experience and “training and learning contract” contract,

7

14,7

42,6

36,8

51,6

54,6

Temporary: Seasonal contract

7,9

7,4

37,6

33,5

47,7

59,3

Temporary: trial period

0,2

3

3,1

10,2

6,7

7,3

Temporary: Replacement of workers on leave contract

1,7

3,3

32,9

36,8

74,9

73,2

Temporary: Work and service contract

16,1

23,5

138,1

163,4

228,9

284,3

Temporary: Verbal, not included in previous options

7,2

11,1

22,3

33,5

37,4

51,4

Temporary: Other type

0,5

0,3

8,5

10

23,8

24,3

Temporary: Do not know

4,6

8

33,5

42,3

54,7

77,1

Source: Spanish Labor Force Survey (2013)

Table 2. Young workers per type of temporary contract (%)
 

16-19

20-24

25-29

 

2012QII

2011QII

2012QII

2011QII

2012QII

2011QII

Temporary: Eventual contract due to production circumstances

22,0

21,0

22,3

25,0

20,8

18,1

Temporary: work experience and “training and learning contract” contract,

12,0

16,3

10,4

7,5

7,8

7,1

Temporary: Seasonal contract

13,6

8,2

9,2

6,9

7,2

7,7

Temporary: trial period

0,3

3,3

0,8

2,1

1,0

0,9

Temporary: Replacement of workers on leave contract

2,9

3,7

8,0

7,5

11,3

9,5

Temporary: Work and service contract

27,7

26,0

33,7

33,4

34,5

36,9

Temporary: Verbal, not included in previous options

12,4

12,3

5,4

6,9

5,6

6,7

Temporary: Other type

0,9

0,3

2,1

2,0

3,6

3,2

Temporary: Do not know

7,9

8,8

8,2

8,7

8,2

10,0

Source: Spanish Labor Force Survey (2013)

1.4. Please indicate the main reasons for the emergence and development of the different types of temporary contract which you have listed in response to question 1.3. To what extent are they linked to particular conditions in the labour market or employment protection legislation/regulation in your country? What is the main attraction of such contracts to employers? What effect has the crisis had on the use of such contracts?

In Spain, temporary contracts appeared in the 80s. In a context of growing unemployment, the dominant perspective in employment policies was focused on increasing employment rates by reinforcing labour market flexibility through different fixed-term contracts with less associated dismissal costs. One of the first and most important flexibility reforms appeared with the Social and Economic Agreement (AES) of 1984, which eliminated causality in fixed-term contracts and established different fixed-term contracts to “promote employment”. Before, all the temporary contracts had to be justified attending to a cause related to the production. Elimination of causality meant that employers could hire workers on a temporal basis in order to develop activities the nature of which is not temporal This agreement, later transformed by the Law 32/1984, regulated the “eventual contract due to production circumstances ”, the “work and service contract” and the “replacement of workers on leave contract”. In addition, it introduced the so-called “fixed-term contract to promote employment”. This contract, which was eliminated in 1994, could be applied to any unemployed person in order to develop any job irrespectively of its nature. Moreover, it did not have any temporal limitation.

This measure, signed by the Socialist government, one of the most representative unions (UGT) and the employers’ organisations (CEOE and CEPYME), is viewed as the beginning of the expansion of temporary employment in Spain (Lope, Gibert and Ortiz 2002). The first data available from 1987 shows that temporary employment comprised 15.3% of the total workforce which rose to 34.9% in 1995. These figures have remained more or less stable until today, with a greater effect on new entrants, (i.e. young workers).

With regard to the work experience contract and the training contract, they appeared in 1995 (Royal Decree 1/1995, of 24 March 1995) in order to encourage employment among young people and improve their qualifications. The training contract proved the most controversial. In this sense, some authors (Cachón and Palacio 1999) pointed out that the main goal of the contract was to encourage employment among young people, promoting requalification of those workers to a very limited extend. Furthermore, it is worth noting that both contracts have been scarcely used. Bearing this in mind, both contracts, and especially the training contract, have been subjected to reforms since the beginning of the crisis, as has been described in question 1.3. The first reform, which came with the Socialist government, aimed to reinforce the training content of the contract, whilst the latest reform, enacted by the current Popular Party government , seems to have subordinated the training content to the employment promotion goal. The extension of the working time during the second year from 75% to 85% of the maximum legal working time clearly illustrates that change.

With respect to the open-ended contract of support to entrepreneurs, enacted in 2012, its main goal is to encourage employment by eliminating dismissal costs during the first year.

1.5. To what extent are temporary contracts a ‘stepping stone’ to ‘permanent’ jobs (or those with standard contracts of employment of undefined duration)? Are apprentices and trainees typically taken on by the companies or other organisations concerned on standard permanent contracts once they complete their training? Has the situation changed over the crisis period? Please summarise any relevant studies which have been carried out in your country or other evidence at the national level which exists and give the reference to them.

The CIREM Foundation has carried out research on the transition of young people from education to employment and on transitions within the labour market. The most recent (CIREM 2011) is based on the Continuous Sample of Labour Lives (Muestra Continua de Vidas Laborales, MCVL) and it offers a picture of labour transitions of young workers during the crisis.

In this study, young workers 16-29 aged who had their first labour relationship in 2005 were identified in order to analyse their labour trajectory from 2005 to 2009. Trajectories of 900,000 workers aged 16-29 were analyzed.

The study shows that the first insertion was mostly made in seasonal jobs featured great instability, with medium or low qualifications and fixed-term contracts.

The data show certain permanence and continuity in the labour market. Thus, 65% of the workers aged 16-29 had some kind of employment during the analyzed period and 63% were in employment at least half of the analyzed period. Only 11% of the young workers were in employment during six months or less and 8% between six months and one year. However, in many cases, permanence in the labour market was accomplished by chaining different fixed-term contracts. Therefore, 57% of the young workers have chained short fixed-term contracts during this time period (one year or less) compared to 10% who had the same job during the whole period.

With regard to the question of whether temporary contracts are a ‘stepping stone’ to ‘permanent’ jobs, the study shows that 40% of young workers made a transition from a fixed-term contract to a permanent contract, while a similar percentage made a transition from a permanent contract to a fixed-term contract. These outcomes reveal that instability does not only depend of the kind of contract. The majority of young workers with a part-time contract made a transition into a full-time work.

2. Access to social benefits

2.1. Does entitlement of young people to (contributory) unemployment insurance benefits and (non-contributory) unemployment assistance (i.e. benefits, usually means-tested, which provide a minimum level of income) differ if they are employed on temporary contracts as opposed to permanent ones? If so, please indicate briefly the differences in eligibility conditions and any differences between types of temporary contract (including those working as self-employed for a single employer). Have there been any changes over the period of the crisis?

Generally, it can be said that in Spain there are two main unemployment benefit levels. The insurance level (UI), and the assistance level (UA), which includes different programmes. If an unemployed person has not contributed to the Social Security during at least one year (360 days during the previous 6 years) or has ceased his/her right to the UI, he/she will have to apply for a means tested UA amongst the different programmes which exist in Spain

The duration of the UI level is equal to 120 days if a worker has contributed to the Social Security for between 360 days and 539 days; and equal to 720 days if a worker has contributed to the Social Security for over 2,160 days. During the first 120 days, the replacement rate is 70% of the regulatory base. After 120 days, the replacement rate is 50% of the regulatory base. Before of the crisis, the replacement rate after 120 days was 60%. It was reformed by means of the Royal Decree 20/2012 of 13th of July.

The entitlement to unemployment rights does not differ in relation to the kind of contract or the age, including workers with work experience and training contracts too. Moreover, the conclusion of a fixed-term contract gives access to unemployment benefits However, temporary workers (especially under short-term contracts) are less likely to accumulate the minimum period (360 days) which entitles one to the UI level, which is far more generous.

With regards to the self-employed, they have been covered by a specific UI since 2010 (Law 32/2010 of the 5th of August). The system is mixed: mandatory for bogus self-employed workers and self-employed workers in professions with a higher accident risk; voluntary for the rest of self-employed workers. The minimum contribution period is 12 months, which must be continuous and immediately previous to the unemployment situation. The minimum contribution period entitles beneficiaries to 2 months of UI. This is also applied to young workers.

2.2. Does entitlement of young people to sickness benefits and maternity benefits differ if they are employed on temporary contracts as opposed to permanent ones? If so, please indicate briefly the differences in eligibility conditions and any differences between types of temporary contract (including those working as self-employed for a single employer). Have there been any changes over the period of the crisis?

Entitlement of young people to sickness benefits and maternity benefits does not differ if they are employed on temporary contracts.

2.3. Are there any differences in the entitlement of young people to old-age pensions between those employed in temporary jobs as opposed to permanent ones? If so, please indicate what these are. Have conditions of eligibility to pensions changed over the period of the crisis (including through pension reforms introduced as part of a long-term strategy to improve the financial sustainability of the system)?

In Spain the previous Socialist Party government reformed the pension system (ES1102031I). The reform delayed retirement age from 65 to 67 years and modified the computation period. Thus, the number of years of social security contributions taken to determine the regulatory basis of the pension has been raised from 15 to 25 years. This rise will be applied gradually, increasing by one year each year from 2013 to 2022.

With regard to young workers, the reform improved their rights. Accordingly, research grant and apprenticeship beneficiaries under the training contract (previously excluded form pensions rights) were entitled to pension rights.

There are not any differences in the entitlement of young people to old-age pensions between those employed in temporary jobs as opposed to permanent ones.

2.4. Are there any differences in entitlement of young people to health care between those employed in temporary jobs as opposed to permanent ones? If so, please indicate what these are. Have conditions of eligibility to health care changed over the period of the crisis?

In Spain a universal health care system exists. Accordingly, there are not any differences in the entitlement of young people to health care between those employed in temporary jobs as opposed to permanent ones.

3. Regulation of temporary contracts and policies to support transitions into permanent contracts

3.1. Please describe briefly the regulations applying to the main types of temporary contract in your country. Do restrictions exist on the maximum duration of the different types of temporary contract for young workers or the number of times they can be renewed? Do these regulations differ by age (i.e. between young people and older workers) and/or by type of temporary contract (as mentioned in question 1.3), by occupation, or by sector of activity? Do special regulations exist for those completing apprenticeships or traineeships? Have the regulations changed over the period of the crisis – i.e. has there been a tendency for them to have been tightened or relaxed?

Regulation on the restriction of the extension of temporary contracts has been modified several times since the beginning of the crisis.  In 2010, the law on urgent measures for the labour market reform (Law 10/2010), enacted by the previous Socialist government, limited the option of extending temporary contracts. Thus, the duration of binding temporary contracts was reduced and restricted to 24 months for workers who are taken on more than once by the same company or group of companies, even if the job they do changes. At the end of this period, the contract had to be made permanent. One year later, the Socialist government amended its own regulation, by means of the Royal Decree 10/2011 of 26th of August. By means of this Royal Decree, enterprises were allowed to extend temporary contracts indefinitely until 2013. The government argued that the last 24 months limit, rather than favouring the promotion of open-ended contracts, was producing undesired effects such as the non-renewal of temporary contracts, thus hindering employment maintenance.

Since the first of January of 2013, the limit of 24 months is again in force.

3.2. Do incentives exists in your country to encourage employers to opt for standard rather than temporary contracts of employment, to convert temporary contracts into permanent ones or to make it easier for employees to move from temporary to permanent contracts? If so, please briefly describe the form that these incentives take. Do they apply equally to young people as well as to older workers? Are any incentives in place to encourage employers to take on young people who have completed an apprenticeship or traineeship on permanent contracts? Have there been any changes to incentives over the period of the crisis? Are any such changes being proposed or being actively discussed at present in your country?

Since 1997, one of the main goals of employment policies has been to promote stable employment. Main policies designed to achieve this goal have been based on the idea that the high rate of temporary employment is caused by the excessive costs and rigidity of open-ended contracts. Accordingly, several policies have been enacted since the 90s to make open-ended contracts more attractive by: 1) reducing the dismissal costs of open-ended contracts and; 2) introducing discounts in the social security contributions in order to encourage the recruitment of certain collectives, including young workers under open-ended contracts.

With regards to the measures aiming to reduce the dismissal costs of open-ended contracts, the first one appeared in 1997 with the Popular Party government regulation of a new “contract for the promotion of open-ended employment”. The contract was targeted at collectives with special difficulties of stabilization in the labour market, including young workers. It implied a reduction of dismissal costs in the case of unfair dismissal from 45 days per year worked to 33 days. In 2006, the Socialist government maintained the contract and broadened the target collectives. Four years later, the Socialist government extended the use of the contract for the promotion of open-ended employment” to all workers excluding men between the ages of 30 and 45 who had been registered as a job seeker for fewer than three months. Finally, in 2012, the Popular Party reduced compensation in the case of wrongful dismissal for all the open-ended contracts from 45 days’ salary per year worked, up to a maximum of 42 months’ equivalent salary, to 33 days’ salary per year worked with a maximum of 24 months’ equivalent salary. In addition, it modified the reasons that justify objective dismissal (with a cost of 20 days per year worked). It establishes that economic reasons are considered valid “when a negative economic situation arises from the results of the enterprise, in cases such as the existence of current or foreseeable losses, or the persistent drop in revenues or sales. In this case, a drop in revenue or sales is considered persistent when occurring during 9 consecutive months”.

With regard to the benefits for the permanent recruitment of groups with insertion difficulties and difficulties of stabilization in the labour market, the latest reform prior to the crisis was the Law 43/2006 (the previous one was in 2001). This law was a result of the agreement to improve growth and employment signed by the Government and the most representative social partners. The law enacted gives discounts to the social contributions paid by employers in order to encourage open-ended contracts among different groups with a higher temporary rate. As far as young workers are concerned, it introduced a discount in the contributions to the social security for employers hiring male workers between the ages of 16 and 30 under un open-ended contract of 800 € per year for 4 years. For women the discount rose to 1,200 € per year. Subsequent reforms enacted during the crisis have tended to reallocate benefits in order to focus them on the most problematic collectives. In this sense, young workers have continued to be a target group. However, there is no empirical evidence to suggest that these policies have been effective in reducing the temporary rate of young people (Toharia 2011).

Currently, the Popular Party government is encouraging the hiring of young workers aged 16-30 with the new open-ended contract of support to entrepreneurs. Discounts in social security costs applied to this group of unemployment are equal to 1000€ during the first year (1100€ in case of women); 1100€ during the second year (1200€ in case of women); and 1200€ in the third year (1300€ in case of women).

3.3. Is the employment of young people on temporary contracts an important issue of concern for the social partners? Are there strong differences in attitudes and policies between employers and trade unions towards the use of temporary contracts? Have any initiatives been taken by the social partners, either jointly or separately, to encourage the use of permanent rather than temporary contracts? Have any specific initiatives been taken in respect of young people completing apprenticeships or traineeships over the types of job they are offered when their temporary position comes to an end?

Reducing temporary contracts has been a concern of social dialogue and collective bargaining since the 90s.

With regards to the tripartite social dialogue, the last labour market reform which was agreed with the social partners (1997, 2006) was addressed to reduce the rate of temporary contracts. Accordingly, Social Security discount programmes were enacted in order to encourage the transformation of fixed-term contracts into open-ended contracts, with the target being workers between 16 and 30 years of age. However, since the crisis began, social partners have failed to achieve new agreements with the government on reforming the regulation of the labour market. Thus, the latest labour market regulation reforms enacted respectively by the Socialist Party (2010) and the Popular Party (2012) did not get the consensus of the social partners. Both reforms have been mainly aimed at reducing unemployment rather than encouraging stable employment, by extending flexibility, assuming that the causes of unemployment are due to the inefficiency of labour market institutions. As the unions strongly reject this diagnosis, an agreement was not possible.

With regard to bipartite agreements, the bipartite “Agreement for Employment and Collective Bargaining”, signed on 25 January 2012 by CEOE, CEPYME, UGT and CCOO, does not include concrete measures, but lays down criteria and guidelines for collective bargaining. Among its general guidelines, the agreement aims to encourage the recruitment of young workers through the use of training contracts, also favouring the incorporation of those workers once the contract expires. At the same time, the agreement encourages social partners to introduce measures designed to favour the recruitment of young workers in collective bargaining.

Temporary employees as a share of total employees aged 15-24, 2004-2011

 

% total employees

% point change

 

2004

2007

2009

2011

2004-2007

2007-2009

2009-2011

2007-2011

EU27

37.6

41.3

40.4

42.5

3.7

-0.9

2.1

1.2

BE

28.6

31.6

33.2

34.3

3.0

1.6

1.1

2.7

BG

15.3

10.3

9.3

8.3

-5.0

-1.0

-1.0

-2.0

CZ

18.0

17.4

18.7

22.3

-0.6

1.3

3.6

4.9

DK

26.9

22.5

22.8

22.1

-4.4

0.3

-0.7

-0.4

DE

55.5

57.4

57.3

56.0

1.9

-0.1

-1.3

-1.4

EE

:

:

:

13.8

 

   

 

IE

11.2

20.5

25.0

34.2

9.3

4.5

9.2

13.7

EL

26.3

27.0

28.4

30.1

0.7

1.4

1.7

3.1

ES

64.8

62.8

55.9

61.4

-2.0

-6.9

5.5

-1.4

FR

46.7

53.5

52.4

55.1

6.8

-1.1

2.7

1.6

IT

34.4

42.3

44.4

49.9

7.9

2.1

5.5

7.6

CY

16.1

23.3

18.4

17.2

7.2

-4.9

-1.2

-6.1

LV

17.3

9.3

9.3

10.7

-8.0

0.0

1.4

1.4

LT

13.8

9.8

5.0

9.1

-4.0

-4.8

4.1

-0.7

LU

24.1

34.1

39.3

34.5

10.0

5.2

-4.8

0.4

HU

15.1

19.1

21.4

22.9

4.0

2.3

1.5

3.8

MT

9.2

11.0

11.3

17.7

1.8

0.3

6.4

6.7

NL

37.9

45.1

46.5

47.7

7.2

1.4

1.2

2.6

AT

32.4

34.9

35.6

37.2

2.5

0.7

1.6

2.3

PL

60.6

65.7

62.0

65.6

5.1

-3.7

3.6

-0.1

PT

47.4

52.6

53.5

57.2

5.2

0.9

3.7

4.6

RO

6.6

4.6

3.7

5.8

-2.0

-0.9

2.1

1.2

SI

63.1

68.3

66.6

74.5

5.2

-1.7

7.9

6.2

SK

9.9

13.7

12.5

18.6

3.8

-1.2

6.1

4.9

FI

49.8

42.4

39.0

43.4

-7.4

-3.4

4.4

1.0

SE

53.1

57.1

53.4

57.3

4.0

-3.7

3.9

0.2

UK

11.0

13.3

11.9

13.5

2.3

-1.4

1.6

0.2

NO

31.2

28.0

25.7

24.3

-3.2

-2.3

-1.4

-3.7

Source: Eurostat, Labour Force Survey

         
Temporary employees as a share of total employees aged 25-29, 2004-2011

 

% total employees

% point change

 

2004

2007

2009

2011

2004-2007

2007-2009

2009-2011

2007-2011

EU27

19.5

21.1

20.2

21.4

1.6

-1.0

1.2

0.2

BE

12.4

13.1

12.5

14.6

0.7

-0.5

2.0

1.5

BG

9.0

5.3

4.4

4.2

-3.8

-0.8

-0.2

-1.0

CZ

9.8

8.1

8.4

10.8

-1.7

0.2

2.5

2.7

DK

16.5

13.9

13.8

16.4

-2.6

-0.1

2.7

2.5

DE

17.2

21.2

21.2

22.0

4.0

0.0

0.8

0.8

EE

3.0

1.8

4.2

4.2

-1.2

2.4

0.0

2.3

IE

3.4

10.1

9.5

12.7

6.7

-0.6

3.2

2.6

EL

18.4

16.1

19.9

19.0

-2.3

3.8

-1.0

2.9

ES

44.0

41.2

37.5

39.8

-2.7

-3.7

2.3

-1.5

FR

18.3

20.8

20.2

22.0

2.5

-0.6

1.8

1.2

IT

17.2

22.7

23.5

26.7

5.5

0.8

3.2

4.0

CY

19.2

17.7

16.2

18.1

-1.5

-1.5

1.9

0.4

LV

11.8

3.2

4.2

5.5

-8.6

1.0

1.4

2.3

LT

5.3

4.2

2.5

3.6

-1.1

-1.7

1.1

-0.6

LU

7.6

12.5

11.2

12.7

4.9

-1.2

1.5

0.3

HU

8.1

8.9

11.3

11.0

0.8

2.5

-0.3

2.2

MT

1.1

5.6

5.0

6.3

4.6

-0.6

1.3

0.6

NL

16.8

22.9

24.2

25.8

6.1

1.2

1.7

2.9

AT

10.0

8.8

9.6

9.8

-1.1

0.8

0.2

1.0

PL

33.8

38.7

35.6

38.9

4.9

-3.1

3.3

0.2

PT

30.3

36.6

38.6

39.2

6.3

2.0

0.6

2.6

RO

3.4

2.1

1.2

2.1

-1.3

-0.9

0.9

0.0

SI

30.7

33.7

34.1

33.9

2.9

0.4

-0.2

0.3

SK

6.8

5.7

4.1

7.7

-1.2

-1.6

3.7

2.1

FI

28.7

24.5

25.5

26.0

-4.2

1.1

0.5

1.5

SE

24.0

27.4

24.0

25.0

3.4

-3.3

1.0

-2.4

UK

6.2

7.1

6.3

5.0

0.9

-0.8

-1.3

-2.1

Source: Eurostat, European Labour Force Survey

       

References

Cachón, L., Palacio, J.L. (1999) “Política de empleo en España desde el ingreso en la UE”, in Mígueles, F. and Prieto, C. (coord) Las relaciones de empleo en España. Madrid: Siglo Veintiuno de España Editores.

CIREM (2011) Los jóvenes que se incorporan al mercado de trabajo y su acceso a la formación profesional para el empleo en España (2010-2011)”. Fundación Tripartita para la Formación en el Empleo.

Lope, A., Gibert, F., and Ortiz, D. (2002) Atajar la precariedad: la concertación local: ¿un marco para afrontar las nuevas formas de empleo?. Barcelona: Icaria.

Rocha, F. (2011) El trabajo autónomo en España: evolución reciente y principales características, Fundación 1º Mayo 113-127 (http://www.canarias.ccoo.es/comunes/recursos/13/doc86000_Reflexiones_y_propuestas_en_torno_a_la_Economia_Social_y_el_Autoempleo.pdf)

Toharia, L. (2011) “El debate sobre las reformas necesarias para la economía española: el mercado de trabajo”, Gaceta Sindical. 17: 201-237.

Pablo Sanz de Miguel, Cirem Foundation

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