Government to simplify work contracts

Labor reform has boosted foreign trade, claims minister

Jesús Sérvulo González
Labor Minister Fátima Báñez in Congress.
Labor Minister Fátima Báñez in Congress. Fernando Alvarado (EFE)

Labor Minister Fátima Báñez on Thursday announced plans to simplify the paperwork involved in hiring workers, slashing a plethora of different formulae to just five categories of contracts: permanent, temporary, relief, work experience and apprenticeships.

There are currently 41 different formulas for hiring workers in Spain, accompanied by a mass of different incentive arrangements provided by the government, such as reduced Social Security contributions.

“The existence of a high number of formulae and a complex system of incentives constitute an obstacle for the small businessman,” Báñez told the congressional committee on employment. She said the technical work on simplifying the system was well underway with input from all social agents.

A makeover of the hiring process has been one of the long-standing demands of the Spanish Confederation of Business Organizations (CEOE), the country’s largest employer group.

Báñez said the government also plans to bring together available government incentives for taking on workers under a single legal text in order to “facilitate hiring and give legal security to workers.”

The minister also reviewed the impact of the reforms to the laws governing the labor market that were introduced by the government of Prime Minister Mariano Rajoy in February of last year. Since the introduction of the changes, which made it easier and cheaper to sack workers,the number of people out of work has risen by almost a million to just under six million.

Báñez said the growth in exports shows the reforms are working in that area of the economy, and insisted they would also bear fruit in areas related to domestic demand once the economic situation returns to normal.

“Although the Spanish economy is emerging from the crisis, it is still in recession, but the export sector is creating jobs,” she said. “It is domestic demand that is pulling down economic activity and when the domestic economy returns to growth, the result of the labor reform will be evident.

“If the model is working for the export sector, which has known how to benefit from its advantages, when the economy gets back to normal, the advantages will spread to the general economy.”

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