European commissioner calls for Spain to adopt single work contract

The European commissioner for employment, László Andor, on Monday suggested that Spain should consider introducing a single work contract as a means of stemming endemically high unemployment in the country, particularly among young workers, and ending the segmentation that marks the Spanish labor market.

Andor made his comments as Prime Minister Mariano Rajoy was addressing a news conference with his visiting Portuguese counterpart, Pedro Passos Coelho. Rajoy said that he was “very satisfied” with the labor reform introduced by his government in February of last year.

A single work contract would do away with the distinction between temporary and permanent workers. Andor told a seminar in Madrid that in countries such as Spain, those on permanent contracts are excessively protected in comparison with temporary workers, who have fewer rights.

Spain has the highest percentage of workers on temporary contracts in Europe and a current jobless rate of 27.2 percent, a record for the country, with 6.2 million people out of work. The youth unemployment rate is 57.2 percent.

The reform introduced by the government last year sought to make it easier and cheaper to sack workers by reducing their severance pay entitlements. Workers on permanent contracts are now entitled to 33 days’ wages for every year worked up to a maximum of 24 months.

The ceiling before was 45 days for every year worked up to a limit of 42 months.

“We have no intention of changing things in one way or another,” Rajoy said. “We are currently in a process of evaluation to see the effects it has had, but I can tell you we are very satisfied.”

The main opposition Socialist Party has urged Rajoy to do a U-turn on the reform, arguing that it has only served to swell the ranks of the unemployed even further.

Spanish businesses have also been calling for a single work contract. Labor Minister Fátima Báñez has recognized the need to simplify the different modalities of contracts that exist in Spain, while labor unions argue that this would reduce the overall stability of the labor market.

Rajoy is due to meet with business leaders and labor union leaders on Thursday to discuss reforms.

Andor said it was also important for governments and businesses to work with social agents to improve the overall quality of jobs on offer. Brussels also wants Spain to reduce the social security contributions that are made by Spanish companies.

The commissioner said that the government should promote youth employment by offering training with work opportunities. He noted that the 57-percent jobless rate in Spain costs the state 16 billion euros annually.

Rajoy described youth unemployment in Spain as a “national emergency.”