Job insecurity still high in Spain

Data for 2003 reveal that 70% of people starting a job are not there one year later. Additionally, 15.5% of all Spanish employees experienced a break in employment over a three-month period. Women, young workers and non-qualified manual workers are most affected by involuntary job breaks.

The Spanish Institute of Fiscal Studies (Instituto de Estudios Fiscales , IEF), a subsidiary body of the Spanish Treasury and Ministry of Economics, recently published a working paper aimed at assessing job security in the Spanish labour market. This paper, Job security in Spain: Evidence from the Spanish Labour Force Survey 1987-2003 (337kb pdf; in Spanish) (La seguridad del empleo en España: Evidencia con datos de la EPA 1987-2003), reveals high job insecurity in Spain.

Job security is assessed by analysing the ‘job-break rate between the first and second year’. This means the percentage of Spanish employees starting a job who are not there one year later. The move can be due to change of jobs, or other voluntary or involuntary reasons (finishing contract, dismissals, etc). Available data from the Spanish Labour Force Survey (EPA) reveal that this indicator reached 70% in 2003, one of the highest among industrialised countries: the vast majority of OECD countries report rates of between 30% and 40%.

In 1987, the ‘job-break rate between the first and second year’ was 54%, rising sharply to 83% in 1994 and 1995. It then fell back slightly, leading to the current level of around 70%. Figures are even worse among young workers: 80% starting work are not in the same job one year later. As may be expected, the ‘job-break rate between the first and second year’ is more acute among temporary workers (84%) than among permanent ones (10%). Gender does not make a significant difference, though the female rate (72%) is slightly higher than that for men (67%).

Trends in job break rate between first and second years

An in-depth analysis of job breaks in general, that is, the percentage of all employees who experience a change in their job status due to a change of jobs, voluntary or involuntary, reveals that, in 2003, over 15.5% of Spanish workers had experienced a job break during the surveyed three-month period. The majority of them, 11% of all workers, changed jobs, while 4% of workers experienced an involuntary job break, becoming redundant or inactive. The remaining 0.5% reported a voluntary break. The rate of involuntary job breaks is greater among women (4.7%) than men (3%), and greater among young workers aged 16-24 (6%) than older ones (2.9% for those aged 35-49). Looking at occupational groups, non-qualified manual workers are more likely (7.8%) to suffer from involuntary job breaks, compared with 1.7% for qualified workers.

Job instability increased until the mid 1990s in Spain: in 1995, 21% of employees had experienced a job break in a three-month period. The rate then stabilised and, since 1999, there has been a reduction.

Trends in reasons for job breaks

In summary, empirical evidence suggests that job insecurity has increased in the Spanish labour market during 1987-2003, being particularly acute among women, young workers (under 25 years of age), non-qualified workers and temporary workers. It is argued that labour instability may negatively affect household consumption and curtail Spanish economic growth. It may also lead to a lack of incentive for employers and employees to invest in training and, hence, a reduction in both labour productivity and wages.

As a result of this, the authors of the study suggest the need for implementing measures to foster permanent employment, such as: support or training for unqualified workers, bonuses for permanent contracts, or social security exemptions for companies hiring employees from certain groups such as women, temporary workers and unqualified workers.

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