Reform of overtime is still pending

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A reform of the rules on overtime working has been pending in Spain since the social partners and the government made a commitment in this area in 1997. However, there has still been little progress, with the 1999 National Action Plan on employment, issued in May 1999, containing no measures to reduce and reorganise working time.

As in 1998, one of the criticisms that trade unions have made of Spain's 1999 National Action Plan (NAP) for employment, in response to the EU Employment Guidelines (EU9810130F) is that it does not contain any measures to reduce and reorganise working time. Even the reform of overtime, which seemed to be the least controversial aspect, is still pending. In the intersectoral agreements of April 1997 (ES9706211F), employers' organisations and trade unions had agreed to initiate consultations with the government on this topic. It seemed that there was a certain consensus on limiting the use of overtime in favour of employment. However, at the end of 1998 the government closed this period of consultations and adopted unilateral measures. It removed the reduction in social security contributions in respect of pay for overtime, and these hours will no longer be included for the purposes of calculating unemployment benefit.

The trade unions criticised these measures severely, stating that they penalised workers and, that rather than limiting overtime (to transform it into employment), they responded to economic aims. As an alternative, the unions proposed: reducing the maximum annual amount of overtime and introducing daily and monthly limits; making overtime incompatible with agreements on more flexible working hours; increasing mechanisms relating to transparency and trade union control; and reinforcing the activity of the Labour Inspectorate in order to avoid fraud. However, these proposals were not reflected in the 1999 NAP (ES9907239F).

Regulatory framework

In Spain, overtime (horas extraordinarias) is regulated by law (the Workers' Statute). The basic points are that:

  • overtime is defined as that work carried out in addition to the ordinary working hours established by collective agreement or individual employment contract;
  • it should be voluntary (unless there is prior agreement that the employee will perform overtime);
  • its remuneration cannot be lower than that of ordinary working hours; and
  • a full-time worker can work 80 hours of overtime per year, without counting those overtime hours compensated by time off or time worked due to force majeure (preventing or repairing catastrophes and other extraordinary and urgent damage).

There are no legal stipulations on the permissible reasons for overtime, and the employer is responsible for deciding how to use it - whether it be sporadic or structural, foreseeable or unforeseeable, ordinary or extraordinary. The reasons for overtime must be agreed through collective bargaining.

Practically all collective agreements establish higher pay rates for overtime than for ordinary working hours - on average 32% more. Agreements usually distinguish between overtime "due to force majeure" and the rest, which is usually called "structural" without going into the reasons. Recently there has been a certain tendency to limit the amount of overtime and to compensate it with time off. In 1997, overtime was: eliminated in agreements affecting 11.5% of workers; set at a lower level than the previous year in agreements affecting 3.4%; and set at a lower level than the legal limit in agreements affecting 3.8%. Nevertheless, everything indicates that the amount of overtime is increasing.

The development of overtime

It is very difficult to assess the real volume of overtime in Spain. Official surveys of working time (Encuesta de Tiempo de Trabajo) and of the labour situation (Encuesta de Coyuntura Laboral) show the amount of overtime declared by companies, but these data include only part of the real level of overtime. There is general agreement among analysts that a large amount of overtime is not declared, and is either paid illegally or not paid.

However, the data on declared overtime serve as a general reference. The most recent working time survey estimates that 85 million hours of overtime were worked in 1996. The estimate in the survey of the labour situation for the same year is lower, at 65 million hours, due to methodological differences. However, both figures are high, representing the equivalent of 36,000-49,000 full-time jobs.

The survey of the labour situation, which offers comparable data between 1990 and 1996, shows that since 1993 the average annual amount of overtime per full-time worker has increased significantly: from 23 hours to 28. This increase is higher than that which occurred in the last period of economic recovery, so it is not solely attributable to the favourable state of the economy. Since 1997, the data in this survey have not been comparable with the previous ones, since workplaces with fewer than six workers are now included. The average amount of overtime continued to grow until mid-1998, but in the second and third quarters of 1998 it began to fall.

By sector, the increase in overtime has been found mainly in construction and services, while industry is more stable. The increase in overtime in services is almost entirely due to the high growth rate in the subsectors of financial services and services to companies. A study carried out in 1997 by the banking federation affiliated to the CC.OO trade union confederation confirms this, and shows that a great deal of overtime is not declared or remunerated. In industry, the metalworking sector shows the greatest amount of overtime. Another notable aspect revealed by this survey is that overtime tends to be increasingly performed by a smaller number of workers. In 1990, some 12% of workers carried out overtime, a figure which in 1996 had fallen to less than 10%. In services, the sector in which the greatest amount of overtime is performed, the concentration is even greater, at 8%.

Commentary

As the trade unions point out, the reform of overtime is still pending. This is not a trivial topic in a country with such a high unemployment rate as Spain. The data show the high volume of overtime, its relatively high cost and its concentration among a small number of companies and workers - factors that favour its conversion into new jobs. The unions are the only social partners that defend reform of overtime, although they would find it very difficult to defend and apply in companies, because overtime is often a way of compensating low wages and is therefore popular among workers. In this area, as in others, the unions call for solidarity between those that have jobs and those that do not, seeking less overtime, more flexible working hours and more employment, but they have not achieved the support of the government and the employers' organisations (María Caprile, CIREM Foundation).

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