Brussels, 13/02/2012 (Agence Europe) - Even though it still has to conduct a more in-depth assessment, the European Commission reacted positively on Monday 13 February to Spain's adoption of further reform to bring greater flexibility to its labour market, including reducing redundancy compensation and measures to encourage youth employment.
Unemployment is currently unacceptably high (22.85% of the labour force at the end of 2011) and the Spanish labour market has not so far responded sufficiently flexibly to the change in economic circumstances, said the spokesman for Economic Affairs Commissioner Olli Rehn. The Commission is pleased that the new Spanish government has made reform of its labour market one of its priorities, he went on. According to the Commission, the reforms approved on Friday are wide-ranging and seek to remedy a number of structural problems, such as collective agreements and employment policies, in the Spanish labour market. Some points of the new law, for example, reducing the considerable difference in employment protection between fixed-term and permanent contracts (greater flexibility in collective bargaining), seem to the Commission to be moves in the right direction for reducing the segmentation of the labour market, the spokesman said, too. The Commission has still to examine the reform in detail over the coming weeks before presenting a full assessment to the Eurogroup and the Ecofin Council.
Under the Spanish reform, compensation for unfair dismissal will fall from 45 to 33 days per year worked. In cases of layoffs in which a company does not argue economic reasons, the maximum amount a person can receive will now go down to 24 months of salary, from 42 under the old law. The previous reform of the labour market by the Socialist government of José Luis Rodriguez Zapatero had tried to reduce severance pay to 33 days but this was not imposed and the norm remained 45 days. For financially motivated lay-offs, compensation is limited to just 20 days per year worked. Companies will no longer have to seek authorisation from the ministry nor obtain the agreement of the trade unions to introduce a redundancy programme and mass redundancy. Among the other measures announced, the reform of collective agreements will impose greater flexibility on employees (working times, posts, geographic mobility).
To encourage companies to take on workers, a number of aid packages will be put in place. Small and medium sized companies will have their social costs reduced by €3,000 when they hire a person aged under 30 (youth unemployment has reached 48%), and by €4,500 when they take on a long-term unemployed person aged over 45. If an unemployed person manages to find a job, he/she will be able to keep 25% of the benefits he/she was receiving in addition to his/her salary for one year. To be more efficient, employment agencies will have to work with private temping agencies. To tackle benefit fraud, unemployed persons may be required to carry out work for the community.
The Spanish government has already given warning that, despite these reforms, unemployment will rise further in 2012. (LC/transl.rt)