First effects of unemployment benefit reform assessed

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In September 2002, the CC.OO trade union confederation published some figures on the effects of the unemployment benefit reform that came into force in Spain in May 2002. One of the main findings is that over 85,000 dismissed workers have lost the right to the 'interim wages' formerly paid while awaiting the outcome of unfair dismissal cases.

Representatives of the Trade Union Confederation of Workers’ Commissions (Comisiones Obreras, CC.OO) on the National Institute of Employment (Instituto Nacional de Empleo, INEM) recently asked the Institute for a series of figures in order to evaluate the effects of the reform of the unemployment benefit system introduced unilaterally by the government, which came into force in late May 2002 (ES0206210F). Though in many cases the information requested was not available, the figures provided by INEM and published in late September by CC.OO illustrate the impact that the reform is having.

During June and July 2002, INEM offered 138,121 jobs to unemployed people and took action against 85 unemployed persons for refusing offers (as newly allowed by the reform). In the same months, in line with the reform, special agricultural unemployment benefit was refused to 4,268 workers in Andalusia and Extremadura. Finally, between June and August 85,829 workers claiming unfair dismissal were denied 'interim wages'.

Under the previous regulations, dismissed workers claiming in court that their dismissal was unfair were entitled to receive pay between the date of dismissal and the court ruling, if the court confirmed that the dismissal was unfair. Under the unemployment benefit reform, these 'interim wages' (salarios de tramitación) were abolished in most cases. Now, only workers who are reinstated in their jobs after the court finds the dismissal to be unfair are entitled to receive interim wages. The trade unions claim that the new regulations significantly reduce the cost of dismissal and blur even further the difference between justified and unfair dismissal. The interim wages represented on average two to four months' pay. The unions feel that this measure is particularly unfavourable to workers with little seniority in the company, because in these cases the interim wages formed a very large proportion of dismissal compensation. Furthermore, they consider that the new regulations provide an incentive for companies not to reinstate workers dismissed unfairly, a practice that is optional for the company and is fairly uncommon.

At present the legislation implementing the reform is going through parliament and the People's Party (Partido Popular, PP) government has for the first time shown some willingness to modify some of the more controversial aspects. Interim wages may be a key issue; the Minister of Labour has stated that the government is considering the possibility of restoring the scheme, though with some limitations.

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