More than half of Spain's youth enter job market with permanent contracts

Employment

The labour reform has increased indefinite contracts by 40 per cent among those under 30, but reduced their average duration by 100 days

Wendy Dávila

The labour reform in Spain has achieved "undeniable success" in reducing temporary employment, especially among younger workers. This is the main conclusion of a study think tank Fedea presented on Tuesday.

According to Fedea, more than half of young people under 30 are entering the labour market with a permanent contract.

Before the 2021 reform, between ten and 17 per cent of young people were likely to have a permanent contract.

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The regulatory change also brought a shift in the labour market, increasing the likelihood of young people obtaining a permanent employment contract to nearly 57 per cent.

According to Fedea researcher Marcel Jensen, young people have practically eliminated 90 per cent of the differences in access to the labour market with an indefinite contract since the reform.

In the study, Jensen analyses data from the continuous sample of working lives for people under 30 years of age in the period 2014-2023. He concludes that, in the first quarter of 2021, when the labour reform was not yet fully in force, there was already an improvement in the possibility for young people to reduce temporary employment in the labour market.

However, it's not all good news. The labour reform has reduced the average duration of standard open-ended contracts by about 100 days due to the nature of the legislation, which eliminated fixed-term contracts for specific projects and services and increased the grounds for establishing employment relationships with an open-ended contract.

"In a way, we are moving from contracts that are purely seasonal to contracts that can also be used for intermittent tasks with shorter durations," Jensen said.

For Jensen, it was necessary to put limits on temporary hiring, but the data shows that this has not been "enough". It is still relatively cheap to dismiss someone with a short-term permanent contract, so dismissals for permanent workers are increasing.

Therefore, if this practice continues over time, it will be necessary to act but not in a restrictive manner, like the reform on unfair dismissals that the Ministry of Labour wants to promote with trade union organisations.

As an alternative, Jensen proposes a 'bad-bonus' system that rewards companies with low turnover and penalises those with "excessive" turnover.