Active employment policies in Spain: an overview

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After a decade of their operation in Spain, active employment policies have led to only limited results in promoting job creation. This feature examines the variety of policies that have been introduced and the results of relevant experiments, and looks at social partners' reactions.

Since the mid-1980s, employment policy in Spain has been characterised by increasing flexibility on the labour market in the areas of recruitment, employment and dismissal (the "employment circuit"). In 1984 the tripartite Economic and Social Agreement (AES) introduced a wide range of specific measures for temporary employment. The 1994 labour market reform increased the flexibility of employment within companies, and finally the most recent labour market reform, which was agreed in April 1997 (ES9706211F), made dismissal procedures more flexible and aimed to reduce the rate of temporary employment.

Despite the policy of making access to employment more flexible, high rates of temporary employment have coexisted with a high rate of unemployment. This has led to a decrease in job security and loss of jobs just at a time when the economic cycle is at a low point. In situations of uncertainty companies prefer to dismiss and to recruit again later when the economic cycle is more favourable. This explains the loss of jobs in the period 1991-4 and the subsequent variations in recruitment in the period 1994-6, as well as the lack of expansion of private consumption, which also hinders economic recovery.

In fact, macroeconomic employment policy based on greater flexibility in the "employment circuit" and on pay moderation is no longer valid, in the view of many. The general direction of employment policy, as applied for more than a decade, has arguably proved to be limited and negative, not only because it has made the status of employment more insecure and vulnerable, but also because it has not served to coordinate and rationalise the use of passive unemployment policies (governing areas like pensions and social security).

Active employment policies

For over a decade, answers have been sought to these limitations in the scope of general employment policies. These answers have focused on fostering an integrated policy designed to establish a positive relationship between employment and social protection. In other words, active policies are coordinated with passive policies, and emphasis has been placed on linking regional action with local economic development.

To a certain extent, the aim is to get unemployed people back to work rather than just to offer unemployment benefits. Active policies try to give priority to those who find it particularly difficult to get jobs, such as people aged over 45, the long-term unemployed, women and people with disabilities. One of the main features of the reorientation of employment policy is the integration of active and passive policies. The other main feature is a certain trend towards regional decentralisation in job-creation initiatives. Thus, in the regions, the possible creation of new jobs is associated with local development and enjoys the participation of unions, employers' associations and local institutions.

In other words, a trend towards "mesoconciliation" seems to be appearing at the local and regional levels as a new space for dialogue between unions, employers and local institutions (such as regional governments and councils at different levels, including town councils).

Main lines of action

Since 1986, local development policies and the promotion of active employment policies have consisted in combining a series of interrelated measures, such as the promotion of local initiatives, the improvement of information systems between supply and demand in the labour market, fiscal measures, investment incentives, the search for new forms of employment and the improvement of vocational and occupational training. This has been demonstrated in the variety of experiences at regional level, which we summarise below.

1. Promotion of local initiatives

In 1986, and particularly in 1994 (through Ministerial Order regulating local employment initiatives, and local agents and employment development, 12 April 1994), the central government established a programme for promoting local employment initiatives which gives advice and subsidies for setting up viable projects to small and medium-sized enterprises (SMEs). These measures are aimed at revitalising local economies and in particular at seeking new employment initiatives (such as the care of the elderly, leisure activities and so on) associated with the characteristics of the region. In other words, it is an approach from the bottom, from the local level, rather than a centralised approach from the top. Nevertheless, these initiatives are not of sufficient scope and importance to create jobs on a large scale.

Active employment policies are associated with SMEs, cooperatives and workers' limited companies, and the self-employed. Here we should also mention the - complementary - initiative of the Basque Region (Euskadi) in promoting cooperatives and workers' limited companies in the area of services such as home services, childcare, care of senior citizens and disabled people, cultural services and utilisation and recycling of waste.

In different regions of the country, similar experiments are also being tried out. In Aragon, the regional government has promoted the development of rural tourism in the Pyrenees, the rehabilitation of abandoned villages, the recovery of traditional cuisine, the protection of the environment and youth training policies. These policies have been agreed with the unions and employers, but have not been very effective in terms of job creation.

2. Improving information systems and labour market observatories

The different experiments have had a factor in common, and one suggested by the central authorities (see "Economía, trabajo y sociedad. Memoria sobre la situación socioeconómica y laboral", Consejo Económico y Social, Madrid (1996)). It consists in improving the information systems between demand and supply in the local area by promoting employment "observatories" at a regional level. An interesting experiment is being carried out by the Provincial Council of Barcelona through the connection of a wide network of labour market observatories in different boroughs in the metropolitan area of Barcelona. The aim of this network, connected through electronic mail, is to: exchange information on labour demand and supply; exchange labour information for the planning of local policies; study demands for qualifications and professional profiles for companies; and monitor and assess employment policies.

At regional level, other experiments involving the promotion of job-seeking are also beginning to emerge. "Work clubs" are important, at least as a novelty. They consist in meeting points offering information on job offers, as well as training in drawing up curricula vitae and elementary communication techniques. Information on offers of employment is gathered and worked on in teams by the job-seekers themselves. These tasks are coordinated by a trainer and are an adaptation of the UK experience with "job clubs".

Another novelty in labour mediation is the establishment of personalised employment programmes for certain types of person who find it difficult to obtain work. These programmes form part of the Integrated Employment Service Plan (SIPES) of the Ministry of Labour, whose aim is to provide careers guidance. The SIPES plan is run by the town halls, amongst other institutions, and is linked with the "trade houses" (Casas de Oficios) and "workshop-schools" (Escuelas-Taller), whose purpose is to share the training of young people - in craft trades and professions - with work on useful public tasks such as restoring historical buildings, repairing parks and gardens and so on.

3. Fiscal policies and investment incentives

The third line of action is through fiscal policies. In recent years, certain regional governments have been carrying out initiatives to stimulate investment in their respective territories. Euskadi has carried out a pioneering experiment involving tax exemptions that has reduced taxes on companies, inheritance and private individuals. This has led some companies to move their headquarters to this region. The government of the Autonomous Community of Navarre later carried out a similar experiment under the auspices of their historical rights which - along with Catalonia and Euskadi - grant them greater independence from central government than certain other regions.

The fiscal differences between the regions with historical rights - Euskadi and Navarre - and the neighbouring communities of La Rioja and Aragon ranges from 0.8% to 32% and amounts exceeding ESP 100 million. Consequently, the use of fiscal policies to stimulate local development is a source of conflict with the governments of the adjoining regions. But these have also responded with active policies. Thus, La Rioja responded with a policy of incentives for industrial investment, which meant that in the last year investment increased by 24% (Cinco Días, April and May 1997). Other regional governments, such as Castilla y León in the cases of Iveco-Fiat and Renault, and Andalusia in the meat industry, have also granted subsidies and direct guarantees to medium-sized and large companies which have the capacity to generate subcontracted employment and other beneficial effects in the labour market.

4. Commercial development and export promotion

A fourth line of action taken by regional governments is the promotion of trade and export. Amongst recent experiments, the government of Aragon has launched an intervention programme for aid to exports by SMEs. The Exportaprogramme created by the Aragonese Promotion Institute is aimed at boosting the confidence of SMEs to compete in foreign markets. Exportaplaces at the service of SMEs commercial advice, translation and telephone interpretation services and advice on technology. It also offers a large international trade network that promotes, through the Internet, 10 million accesses to businesses per month.

Another experiment is being carried out by the Junta of Andalusia, which has organised trade visits to Latin America in cooperation with the Trade Promotion Institute of Andalusia.

5. Vocational training and occupational training

Vocational training was reorganised in the period 1993-6 to increase the quality of the content of training, and to bring it closer to the demands of companies, the needs of the labour market and the establishment of new qualifications. Another plan was the National List of Professional Certificates, whose aim is to provide information on qualifications awarded in the different subsystems of vocational training in order to facilitate the mobility of the active population. Two types of qualification will be recognised: those resulting from official vocational training and those resulting from occupational training.

Occupational training also plays an important role as a mechanism for rapid adjustment between demand and supply of training and professional retraining, especially at the local level, because it can be adapted more quickly than official vocational training.

At a local level the workshop schools and trade houses, financed by the SIPES plan and linked to the town halls, also make a contribution to training. The activity of these local institutions is aimed particularly at young people who have failed at school, those who have not finished school and those who find it difficult to enter the employment market.

6. Regional employment policies

Finally, as an example of the integral and general nature of the attempts to reorient employment policy, we can mention the case of the agreement between the Basque Government and the Mondragón Cooperative Corporation (MCC) to create 8,000 new jobs by the year 2000 (ES9707116F). The agreement covers issues such as training, the development of the social economy, prevention of risks at work, action on employment and job sharing. In exchange, the Basque Government agreed to finance part of the strategic measures carried out by MCC, such as the setting up of progressive and partial retirement plans, consolidation of temporary contracts, reduction of overtime and coordination of labour demand and supply with the placement service of the regional government.

Commentary

The assessment made by the social partners of the above measures so far is not optimistic, and the results are very poor. These attempts at reorienting employment policy have their limits and so are unable to solve problems that run very deep.

The first difficulty is the lack of social partner representational structures in the regions, as demonstrated, for example, by attempts to draw up local employment agreements. One of the most frequent problems is the lack of organisation of small local businesses, which are characterised by little technical and vocational training and a paternalistic labour relations philosophy. Furthermore, the trade unions often lack representation and a consolidated organisational structure in the regions. Consequently, this lack of structure means simply that there are no recognised representatives who can reach agreements and promote local and regional agreements.

The second problem is the shortage of financial and public resources to stimulate local investment. Thirdly, the instruments necessary for stimulating local development are very weak. Hence at a regional level the authorities do not have sufficient powers and cannot apply expansionary monetary policies, as has been traditional in macroeconomic employment policies. Another difficulty is the limited degree of use of fiscal policies at a regional level, since they are largely reserved for central government. In any event, local policies may play a complementary role with other macroeconomic policies. (A Martín Artiles and F Miguélez Lobo, QUIT)

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