Precarious Work and Labour Law Reform (Spain) Dr. Nuria E. Ramos Martin. Update of BARSORI project report AIAS Seminar 5/07/2012

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1 Precarious Work and Labour Law Reform (Spain) Dr. Nuria E. Ramos Martin Update of BARSORI project report AIAS Seminar 5/07/2012

2 Labour Market Figures Work Force Survey 1 st quarter 2012 Unemployment rate on average is 24.4%. Since then the unemployment rate is slightly decreasing. In June the total number of unemployed people has decreased by The number of unemployed people is The activity rate increased in agriculture and went down in all the other sectors, including construction, and services. The rate of temporary employment amounts to 23%. 78% of employment contracts are full-time. Unemployment rate is decreasing in the last months in all regions but there are still great differences among the regions, (the unemployment rate ranges from 11% in Navarre and 30% in Andalusia).

3 Evolution of Unemployment

4 Vulnerable groups The unemployment rate of foreign workers is 37% (Work force survey). According to a report published by UGT March 2011: Foreign men earn on average 40.63% less than the average annual salary (as of 2009) - foreign women 51.35% less than that wage. In the last quarter of 2011, the drop in labour market participation and the rising unemployment was more pronounced in women than in men. In the first quarter of 2012 the unemployment rate of young workers (20-24 years) amounts to 48%. On a yearly basis the number of registered employment contracts is decreasing by 6% and this decrease is even higher for permanent contracts (12.6% less) in comparison with the same reference period in This percentage raises to 15% less in the case of fulltime permanent contracts.

5 Recent Major reforms of employment/social legislation RD Law 10/2010 & Law 35/2010 Labour market reform (temporary contracts, special open ended contract, collective bargaining rules, training contracts, unemployment services and temporary employment agencies) RD Law 7/2011, reform of collective bargaining system (hierarchy of collective agreements, content and validity of the collective agreements, entitlement to negotiate collective agreements, application and interpretation and negotiated internal flexibility of collective agreements); RD Law 10/2011 (temporary employment, training contracts for young people, special open ended contracts, long-term unemployment); Law 27/2011 on the modernization of the social security system; Law 36/2011 on social jurisdiction; RD Law 1620/2011, dealing with the special employment relation of the providers of services at home; RD Law 3/2012, on Urgent Measures for Labour Market Reform

6 Flexible employment (Main) types of temporary contracts in the Workers Statute & other legislation: A. Fixed-term contracts: Fixed assignment or service contract Special circumstances related to markets demands/accumulation of tasks Interim positions B. Training/apprenticeship contracts C. Temporary agency work Art Workers Statute Equal treatment in working conditions and social security protection, equality pro rata (exception termination of the employment relationship Lower compensation).

7 Legislation on stability of employment (amended by RD Law 10/2011 and RD 3/2012) A permanent employment relationship is deemed to exist in the following cases: - Workers who have been performing services without being duly registered in the social security office, once the probation period has elapsed; - Workers on temporary contracts not conforming labour law; - Workers who had been employed for a period exceeding twentyfour months within a period of thirty months, with or without interruption, for the same or different job with the same company or group of companies with two or more contracts, either directly or through temporary employment agencies, (Not applicable until ); (not applicable for training, interim contracts, or temporary contracts concluded in the framework of public employment programs) - Workers hired under an assignment or services contract after three years of employment. (maximum duration may be extended on twelve months by sectoral collective agreement).

8 Role of collective bargaining Fixed work or service of uncertain duration. Maximum duration of three years extendable to twelve months by sectoral collective agreement; collective agreements (including company agreements) may identify those jobs or tasks that may be covered by these contracts. Temporary contract - exceptional market conditions, accumulation of tasks or excess orders, for normal activity of the company. (maximum duration of six months within a period of twelve months). Sectoral collective agreements may alter the duration of such contracts and the period for calculation (in that case, the maximum reference period for calculation shall be eighteen months, the duration of the contract cannot exceed three-quarters of the reference period and a maximum of twelve months.) Collective agreements may determine the sort of activities suitable for temporary workers, and establish general criteria for the maximum percentage of temporary contracts in relationship with the company's total workforce. Collective agreements may establish extra requirement to prevent abusive used of temporary employment contracts and to facilitate the access of temporary workers to professional training. In 2006, the percentage of workers covered by agreements including clauses altering the maximum duration of the fixed-term contract and/or the reference period within which that maximum duration can be calculated was nearly 50%. The clauses dealing with training contract covered 40% of workers.

9 Contract for promotion of permanent employment (available up to feb-2012) The main difference between this contract and the regular permanent contract of employment is that, when the contract is terminated due to objective reasons and that termination is legally declared unfair, the amount of compensation (severance payment) is lower, (thirty-three days of salary per year of service, prorated for the periods shorter than one year and up to twenty-four monthly payments), than the regular one set previously by the Workers Statute (45 days maximum 42 payments). It could be signed between the employer and the following groups of workers (Law 12/2001, Law 35/2010 & RD Law 10/2011): Women in professions or occupations with low rates of female employment, women within the two years immediately after giving birth or adopting children, or after a period of five years off work, women victims of gender violence and human trafficking. Workers over forty-five years of age. People with disabilities. Unemployed individuals Workers who were employed in the same company under a fixed-term contract or other type of temporary contract, including training contracts; With Royal Decree 3/2012 this type of contract has become the regular permanent employment contract (reduction of severance payments affecting all workers from the moment it was passed) New Article 56 of the Workers Statute

10 New measures RD Law 3/2012 New type of contract permanent contract for entrepreneurs probation period of one year. Deductions on social security contributions Only available until the moment the unemployment rate is below 15% of the working population. Contract for training (maximum age is extended to 30 years) up to the moment the unemployment rate is below 15%, then 25 years.

11 RD Law 3/2012 New rules on dismissals/collective redundacies A company can dismiss for objective /economic reasons on the grounds that its profits have fallen (or expected) for three consecutive quarters (reduced compensation 20 days salary per year of service maximum 12 months) Elimination of express dismissal under which companies wanting to dismiss workers without litigation could state that the dismissal was unfair at the cost of paying more compensation Reduction of severance payment in case of unfair dismissal for all workers. No need for permission of the Labour Administration in case of collective redundancies. Easier to dismiss long-term sick employees.

12 Changes on the system of collective bargaining (RD Law 03/2012) Decentralization of collective bargaining (priority of company agreement regarding: working time, wages, social benefits) New rules governing the extension of applicability of expired collective agreements; (maximum two years extension) Increasing importance of arbitrage.

13 Protection of domestic workers Successful campaign of the trade unions on advocating for fair social rights of home workers (cleaners, people on care services for minors or elderly people provided at home). Recognition of some labour rights (written contract, holidays, access to the general system of social security, etc.) RD Law 1620/2011; Positive evaluation from the unions side. Critics for excluding the unemployment benefits from the legal protection. Little impact in practice; Uncertainty for domestic workers working short-hours for several employers (outside the social security system now)

14 Trade unions strategies The main trade union confederations UGT and CCOO have promoted a citizens legislative initiative Stable Employment and Rights oppossing the labour law reform of the Socialist government; CC.OO. has elaborated a guide for trade union action including trade union strategies on the applicability of the 2011 labour market regulation (Main critics: postponing the applicability of the rules limiting the use of fixed-term contracts). No agreement on reform of collective bargaining reform by RD Law 7/2011 and RD Law 3/2012 More relevance for the company agreements, priority on: wages, overtime compensation, aspects of working time, holidays, professional classification and certain issues related to type of contracts. Less importance of provincial sectoral agreement; Very critical with the last Labour Law reform by RD Law 3/2012. The main confederations consider that the content of the new law is in breach of the Constitution as it interferes with social partners prerogatives.

15 Agreements of Social partners Social and Economic Agreement 2/2/2011 (UGT, CC.OO., CEOE, CEPYME & government), including reform of statutory pension system and employment activation policy; II Agreement for employment and collective bargaining 25/01/2012 (flexible use of deviations by company agreement of the working conditions set up by sectoral collective agreements.)

16 Conclusions and debate The trade union movement has been actively opposing the reforms of labour law leading to more flexible labour markets and diminishing protection of employees. The have reacted late to the increasing unemployment rates and an agreement with the employers organisations on more flexibility in fixing working conditions and decentralization of collective bargaining came late in the crisis (January 2012); The last Spanish governments have adopted several reforms of the employment protection legislation to try to fight the growing unemployment; Is the medicine to a sick labour market to lower protection against unfair dismissal and making redundancies easier and cheaper? Is that the best and the quickest road to economic growth in a context of a global economic downturn? Reform of the functioning of public unemployment services cooperation with TEAs.