Spain: Latest working life developments – Q3 2016

A fall in unemployment and trade union concerns over labour precariousness, and the need for social partners to reach agreement on a new salary pact are the main topics of interest in this article. This country update reports on the latest developments in working life in Spain in the third quarter of 2016.

Unemployment continues to decrease, but quality of jobs created is dubious

According to the data from the Economically Active Population Survey, the most recent data show that the unemployment rate decreased from 21% in the first quarter of 2016 to 20% in the second quarter; a longer time perspective shows a considerable decrease, with unemployment rates at 24.5% in the second quarter of 2014, and 22.4% in the second quarter of 2015.

However, job creation is not balanced by sector or economic activity. Between the second quarter of 2006 (when there were 20.6 million occupied workers) and the second quarter of 2016 (18.3 million workers), there were only three sectors where the number of workers increased:

  • hotel and restaurant (Horeca);
  • education;
  • healthcare.

The last two sectors are linked to the public sector, where the severity of budget cuts has diminished. Many experts criticise the worsening quality of employment, as shown by the high rates of temporary and part-time jobs, and salary devaluation (many trade unions and newspapers have raised concerns about this). The high percentage of temporary contracts is generally attributed to the economic uncertainty (companies are still cautious when hiring new staff), but trade unions prefer to link this trend to the flexibility and ‘relaxation’ introduced by the 2012 Labour Reform. The Trade union Confederation of Workers’ Commissions (CCOO) and the General Workers’ Union (UGT) published a report in September 2016 attacking the excess of temporary and precarious jobs and labour fraud (PDF) particularly in the tourism sector. Employers have not yet reacted to this.

Social partners to discuss new salary pact

Salary levels in Spain remain stagnant. According to data from the Annual Labour Cost Survey, the average gross salary increased by 1.1% in 2015 up to €22,851 (the employer pays €30,857.31 per employee, with 23% earmarked as social security contributions).

Between January and August 2016, 2,453 collective agreements were registered (with economic effects in 2016), including an average salary increase of 1.09%. The Spanish Confederation of Employers’ Organisations (CEOE) and the Confederation of Small and Medium-Sized Enterprises (Cepyme) have to agree with CCOO and the UGT on a salary pact by the end of this year (2016), based on the Agreement for Employment and Social Dialogue 2015–2017 (PDF) signed by social partners in May 2015, which provided for a 1% pay rise in 2015 and a 1.5% increase in 2016. The plan was to link the 2017 increase to be linked to the growth in Spanish gross domestic product (GDP), which is currently above 3%, but pay rises are still to be discussed. Trade unions argue that, in line with the agreement signed, salary levels should increase so that workers recover the purchasing power lost during the years of crisis. However, employers’ representatives say that salaries should not increase more than 1% in 2017 in order to maintain current levels of employment creation.

EU Court of Justice  rules on severance pay for temporary workers

Under Spanish law, permanent employees get severance pay calculated on the basis of 20 days per year worked, whereas temporary workers get 12 days when they are laid off, and temporary substitutes (interinos) do not get any compensation.

However, the Court of Justice of the European Union (CJEU) ruled on 14 September 2016 that temporary substitutes also have the right to receive severance pay, and that the amount received by temporary workers and permanent workers should not be different just because of the type of their contracts.

Unions have welcomed the ruling, and have demanded legal reforms in Spain to give all temporary workers equal severance rights. The acting Spanish government has not taken a stand on this, while CEOE considers that Spanish law covers all the different situations, so that there is no need for legal changes.

However, following the CJEU ruling, at the beginning of October the Superior Court of Justice of Madrid ordered the Ministry of Defence to compensate a former temporary substitute (whose contract had expired) with a severance pay equivalent to that of permanent workers (20 days per worked year).

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