By Íñigo Sagardoy de Simón and Gisella Alvarado Caycho, Sagardoy Abogados
To date, and having taken stock of what the 2012 Labour Reform has meant in practice, we can confirm that the data seems persuasive and hopeful. Indeed, the Spanish economy has passed the recession’s turning point, and has resumed growth in an environment of stable prices: key to strengthening competition further.
This is verified by data collected in the mosst recent Labour Force Survey, published in December 2015, which shows a continued trend of job creation that has strengthened in recent months. Although this is partly due to a more favourable economic situation, the 2012 Labour Reform has also contributed – helping us to understand how, in a relatively short space of time and with still-tenuous levels of growth, labour market figures have managed to improve.
It is worth noting that the current state of the labour market is not down to mere chance. Credit should also go to the reformist path the government started more than three years ago, as well the common understanding of employers and unions who realised from the beginning that moderation in salaries was absolutely necessary to improve a critical situation. The labour reforms and agreements reached by these social agents are crucial to understanding what will happen in 2016, which currently has a positive forecast from all institutions.
This positive trend in employment seems to be gaining strength, based on monthly data provided by the Ministry of Employment and Social Security. This shows encouraging figures, in terms of both decreasing unemployment and increased Social Security registrations. May was the best month in 2015: the number of unemployed fell by 18,000, and the number of Social Security registrations rose by 213,000 (the highest since May 2005). There was an increase in the total number of registrations, of more than 600,000 people: more than twice the amount recorded in May 2014. In fact, when comparing 2015 figures to those of 2014, we see a continued decline in the unemployment rate and a continued rise in the number of permanent contracts. This data shows a significant improvement in the employment market and an unusual dynamism after the great recession that we are gradually starting to overcome.
Understandably, it takes time for any major reform to show results. However, there seems to be a general consensus that these changes have had a remarkably positive effect; other eurozone countries are seeing a continued rise in unemployment, but in Spain more jobs keep being created.
With regard to the reformist path, several important legislative changes came into force during 2015, which focused on furthering the impact of the 2012 Labour Reform. These changes are described below.
Firstly, the Government passed new versions of the Workers’ Statute, the Employment Act and the Social Security Act, which unite separate regulations that were included in various legal texts. In spite of no relevant changes being introduced, the new versions must be taken into account as legal reference in force as follows:
Social agents have taken a positive view of these texts, noting that they will facilitate public knowledge about legal provisions related to employment.
The second major change that came into force over 2015 is the monthly minimum wage, which in 2016 is set at €655.20.
Finally, changes have been made to employment training systems, meaning that employers and trade unions will no longer control the management and expenditure of training resources. They will, however, be in charge of designing such training courses.
Despite these advances in the employment sector, there is still a lot of work to do. The challenge now is actually implementing employment policies, and prioritising training within these policies. In Germany, France and Italy, the recession has been successfully tackled by enabling flexibility in the workplace and a reduction in wages or working hours, rather than making redundancies. This is the specific approach being adopted in Spain.
Fortunately, all financial forecasts, both national and global, indicate that 2016 will see a rise in employment. If, thanks to the reforms implemented, we have created net employment in 2015, then – even during negative quarters – everything points towards an expected growth that will raise the employment rate further still.