Spain: Latest working life developments – Q4 2017

The approval of new law to help the self-employed, concerns over high levels of low qualified workers in the tourism sector, and the advancements in social dialogue are the main topics of interest in this article. This country update reports on the latest developments in working life in Spain in the fourth quarter of 2017.

Law to reform self-employment rules

In October 2017, the Spanish government approved Law 6/2017 for the urgent reform of self-employment work (PDF). The measures introduced include:

  • extending the €50 flat rate for social security contributions to the first whole year (previously, it was applicable only for the first six months);
  • allowing self-employed workers to claim for vehicle costs and water/electricity bills;
  • more support for maternity/paternity leave (self-employed people who take maternity/paternity leave no longer need to organise cover in order to access social security reductions);
  • social security payments are calculated according to the exact day when the worker signed up/off (previously, it was compulsory to pay for the full month, regardless of the date);
  • penalties for a late payment of social security contributions now depend on the length of the delay (previously, they were the same regardless of how long the payment had been delayed).

At the end of the year, the practical implementation of many of these measures was subject to the approval of the 2018 State Budget.

High levels of low-qualified workers

In October 2017, both the International Monetary Fund and the Bank of Spain confirmed that the Spanish labour market was recovering in terms of numbers of employees, but warned that this recovery was happening mainly via low productivity jobs; in sectors such as tourism, commerce, low added-value services or administrative activities. The report added that many of the jobs lost in the construction sector as a consequence of the financial crisis were being replaced by jobs in the thriving tourism sector, with non-qualified workers moving from one sector to the other – between 2008 and 2017, the construction sector lost more than one million jobs, whereas the hospitality, restaurant and catering (HORECA) sector created around 400,000 new jobs.

According to a report by independent academic think tank Fedea (Fundación de Estudios de Economía Aplicada), there are too many low-qualified workers on the Spanish labour market (PDF), with many of them finding job opportunities thanks to the ‘tourism bubble’. The General Workers Union (UGT) and the Trade Union Confederation Workers Commissions (CCOO) have criticised the employment created in the tourism sector as precarious and badly paid (PDF). In a 2017 report on tourism, the unions stated that while the number of visitors and occupation levels in the Spanish tourism sector were the highest since 1999, between January and July 2017, 97% of the new contracts signed in the tourism sector were temporary and part-time.

Progress in social dialogue

After the failure to reach a pact on salaries in July 2017, the Ministry of Employment and Social Security was keen to reactivate social dialogue. Moreover, the ‘Agreement for employment and collective bargaining 2015–2017’ was about to expire, so it was necessary to resume collective bargaining from a broader perspective. In the fourth quarter of 2017, Fátima Báñez, Minister of Employment and Social Security, proposed a number of issues for negotiation.

The most important revolved around the quality of employment and the abuse of temporary employment, with the government proposing the creation of three contractual forms: fixed; training; and temporary with growing protection (temporal de protección creciente) – this would have a maximum length of 2 years (extendable to 3 by collective agreement) and with a severance payment equivalent to 12 days after the first year of work, 16 days after the second year, and 20 days after the third year (similar to the severance payment in permanent contracts).

The government also suggested a bonus-malus system to increase/decrease social security quotas for companies with high/low rates of temporary workers. The Spanish Confederation of Employers’ Organisations (CEOE) rejected the proposals, as it was against increasing companies’ costs (for instance, dismissal costs and social security payments in temporary contracts). Meanwhile, the CCOO and UGT rejected the ‘temporary contract of growing protection’, asking for an increase in fraud sanctions as well as an increase of company social security quotas in short temporary contracts. Nevertheless, the ministry and the social partners agreed to increase the minimum wage in stages up to €850 by 2020 (with a 4% increase from 2017 to €735.9 in 2018). It should be noted that, in previous years, the statutory minimum wage had been unilaterally set by the government.

As for the pact on salaries for 2018, many CEOE members were willing to offer a salary increase of between 1.2% and 2% (plus a further 0.8%–0.9% depending on the productivity of the company), which would be close to the trade unions’ proposal. This caused internal arguments in CEOE, but all members remained against linking increases to inflation.

Commentary

In addition to the issues above, the Catalan crisis continued to create tension across the Spanish political arena, in a government where the ruling People’s Party does not have an absolute majority. One of the consequences of the Catalan independence crisis was that the approval of the 2018 budget was delayed, and this had a direct effect on the approval of different labour and social measures and policies. Trade unions also criticised the paralysis of the social agenda as a consequence of the Catalan issue.

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