The good employment data disarms Feijóo against the labor reform

After the good employment records in May known this Friday, what has dominated in the Popular Party is silence on this matter. While Feijóo and the PP were among the actors who warned the most about the “clear stagnation” of the economy and employment since the end of last year, the labor market has left a trail of good news at the beginning of 2023.

With continuous maximum number of workers, thanks to a massive growth in affiliates month by month, above 200,000 jobs in the last three months, this May Spain exceeded 20.8 million workers affiliated with Social Security for the first time. Among women, another all-time high: more than 9.8 million workers.

Although the new employment ceilings are relevant, there is another piece of information that stands out even more –because it was unprecedented– in the last year: the collapse of temporary work, a scourge that has been stagnant for decades in the labor market in Spain, and which has been reduced to historic lows with the labor reform.

The regulation has managed to hit the nail on the head to reduce temporary contracts, something that had not happened with the past labor market regulations, as warned by the Bank of Spain. The person in charge of the OECD has celebrated this week the labor reform for the reduction of temporary jobs and also for not registering negative effects on employment, according to the analysis of the international organization in its first year of validity.

A temporary job drop that has been widespread, but has had a greater incidence in the group most affected by this form of job instability: young people. They were the most affected by this scourge, one of the causes of the late emancipation and the problems to undertake their vital projects, and now they are the group that has benefited the most by far from the collapse of temporary contracts.

As the OECD Director of Employment, Stefano Scarpetta, indicated this week, this substantial change in the labor market in Spain in such a short time has been combined with a “strong” job creation, on which the international organization pointed out that had noticed negative effects due to the norm.

Specifically, if we look at young people, who have faced this radical change in the way they relate to the labor market, they are also one of the groups where employment has grown the most in the last year.

The vast majority of economists specialized in the labor market, as well as institutions such as AIReF, insist that the analysis of the effects of the labor reform on employment requires even more time and in-depth study, but they recognize its undeniable effect on hiring practices, clipping the wings of the widespread abuse of temporary workers that existed in Spain. The president of the Economic and Social Council (CES), Professor Antón Costas, points out, however, some good signs that speak of the “real” improvement of the reduction in temporary contracts, such as the increase in consumption that the Bank of Spain has verified .

From criticism of “manipulation” to a low profile

The achievements of the labor reform are part of the curriculum of policies and social improvements that the coalition government wants to highlight ahead of the general elections on July 23 and that may be endangered by a hypothetical victory of the PP. Both souls of the Executive, PSOE and Unidas Podemos, insist on the formation of Alberto Núñez Feijóo to clarify his position on the regulation in view of the general elections, if it is one of the laws included in his announced intention to “repeal Sanchismo ”. It must also be remembered that the PP maintains its appeal against the legislation before the Constitutional Court.

But in recent months, already marked by regional and municipal elections and good employment records, the PP leader has kept a low and unclear profile on the labor reform.

Feijóo, who called the Government “sick” for approving the rule with a vote by mistake of the PP and who for months has frequently insisted on the “make-up” of employment and unemployment data on account of discontinuous permanent contracts, no longer maintains such a belligerent position against the legislation. During the last 28M campaign, he praised the unemployment and employment data in the autonomous communities where the PP governs, such as Madrid and Andalusia, also marked by the new post-labor reform contracts.

The PP has focused its criticism on the fact that the inactive discontinuous fixed lines “make up” the unemployment data, despite the fact that the statistical method has not changed compared to when the Popular Party governed. It has also despised them as a mere “name change” compared to the temporary ones, although they are an indefinite modality with greater protection and more rights for workers.

The data from the first year of operation of the labor reform have shown in any case that discontinuous permanent contracts have grown, but that ordinary permanent contracts have also done so and with great intensity. The latter are the vast majority, they represent 71% of all wage earners, while the discontinuous fixed account for 6.5%.

There is a lot of temporary, therefore, that has become indefinite thanks to the norm. According to the monitoring of the Social Security, of the 4.1 million affiliates who had a temporary contract in the first quarter of 2022 and are still registered, more than half -54%- are now permanent, that is, 2, 3 million people. Specifically, 44% have an ordinary permanent contract and 9.7% are discontinuous permanent. From the coalition government they remember that the labor reform sought precisely to promote this type of contract for certain seasonal and intermittent positions until now occupied by temporary ones.

Unemployment as the next battle

Some media that are reporting Feijóo’s intentions on the labor market affirm that he is not considering repealing the labor reform and that he is focusing his strategy on unemployment. The PP is redirecting most of its labor criticism to unemployment, which has fallen in recent years to its lowest since 2008, but is still very high.

Despite the fact that this legislature has faced the crisis caused by the pandemic and later the inflationary crisis, unemployment has also presented a different behavior than in past crises, with a much smaller increase if we look at the peak of the Great Recession. The key, unanimously recognized, was the deployment of the ERTE by the coalition government.

Also in the case of this new labor formula hardly used in the past, the PP accused the Executive of manipulating the data and Pablo Casado counted the people in ERTE as unemployed, with the forecast that many of them would join the lists of the SEPE after massive layoffs. Fortunately, this was not the case, with a policy that has been considered a great success in protecting jobs and companies, which prevented thousands of people from falling into poverty.

Spain’s great challenge regarding unemployment is real, with 2.7 million people in this situation, with a unanimous request from organizations, as well as unions and employers, to reinforce active employment policies and also training and training of the unemployed. In principle, all the parties tend to defend these measures, but later they are not carried out with the necessary ambition, warn the CES and AIReF.

In the coalition government they assume that unemployment continues to be a challenge that requires more measures and warn of the unemployment policy of the PP in the past, with cuts in people covered (subsidy for 55 years, for example) as well as in benefit amounts. This year, the Executive reversed one of those cuts, which limited the amount of unemployment to 50% after the sixth month of unemployment.

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