Economic policy, employers’ strategies and changes in
working conditions in the current crisis in Spain
Josep Banyuls (Universitat de Valencia and Institut d’Estudis del Treball)
Albert Recio (Universitat Autònoma de Barcelona and Institut d’Estudis del
Treball)
1. Introduction
Every crisis involves a transformation of the economic and social structure.
The current recession has been very intense according to the standard
measures of economic performance. Job destruction has been very high in
some countries, social inequalities have increased dramatically and the
quality of employment has declined. However, in addition to these
quantitative changes, it is important to address the qualitative changes to the
existing model. Every change involves breaks and continuity: some features of
the previous model are left behind, while others continue and may even be
reinforced. The changes have a temporal cadence that goes far beyond the
moment of crisis in which they occur.
To analyse the transformations that have taken place in employment during
the current crisis in order to explore future trends, we feel that two basic and
interrelated aspects must be considered: first, the characteristics of the
production model in a broad sense, including business structure, production
specialization and strategic business options; and, second, the employment
model, including government regulation of labour, the structure of collective
bargaining and labour policies of companies. In this context of analysis, public
policy is especially important and has an impact on three levels: in the
dynamics of the public sector as an employer; in its effect on the production
structure (e.g. through R&D, competitiveness, and education policies); and in
its effect on business management and labour relations through labour
legislation.
Taking into account these aspects, the aim of this paper is to analyse the
changes that have occurred in the Spanish economy during the current crisis,
considering not only the period of strong job destruction but also the brief
phase of job creation in recent months. The analysis is fragile to some extent
because the period considered is very short, but the paper’s aim is to explore,
albeit tentatively, any trends that seem to indicate a qualitative change and a
change of model and to assess their impact on employment quality. In this
paper we will first address the basic features of the Spanish employment
model in recent years. Second, we will analyse the most important changes
during the crisis. Third, we will explore the emerging features of employment
quality in the recent period of growth in employment. Finally, we will present
some conclusions.
1
2. The basic features of the Spanish employment model in
the years of growth
In the years before the current crisis, Spain was an example of a successful
country with high rates of growth and job creation. However, the model
showed significant interconnected weaknesses (Banyuls et al 2009, Banyuls
and Recio 2012). One of the main problems of the Spanish labour market is
production specialization. The strong growth in the boom years occurred in
only a few activities. More than half of the jobs created between 1994 and
2007 were concentrated in the sectors of construction (17.9%), 1 real estate
and business services (16.6%), retail and repair (12.8%), and hospitality (8.2%);
manufacturing accounted for another 7.9%. These are all labour-intensive,
low-value-added sectors with a low technological level and a low level of
investment in R&D. With this composition and the type of sectoral
development, the weaknesses are evident: growth is concentrated in a few
sectors related to construction and tourism, industry shows weak international
penetration, and there are few advanced tertiary activities. All of these
characteristics favour poor employment quality and more reactive business
management practices.
The other main feature of the production model in this period is the
predominance of competitive business strategies based on reducing labour
costs, which led to the spread of precarious conditions of employment.
Temporary employment remained at very high levels (above 30% of temporary
employment rate) throughout the entire period of expansion, associated with
a quantitative and reactive labour management based on flexibility. Wages
decreased in importance in the distribution of income (Consejo Económico y
Social 2013) and the quality of employment deteriorated in general (Prieto et
al 2011).
The public sector played a key role in shaping the weaknesses of the growth
model before and during the crisis. In comparison with European standards,
Spain has always been a country with a weak welfare state. During the boom
years, strong growth made the provision of public services compatible with
low tax collection without too much financial stress. There were even years of
surplus. A modest welfare state and the decision to take the “Third Way”
made this balance possible (Miguelez and Recio 2010). But the crisis put an
end to this model. Compared with the Eurozone average, the fall in income in
Spain has been very pronounced and the increase in spending has been very
sharp, so the need for financing has soared.
The underlying problem of these trends is the low development of the public
sector and the limits that this involves. First, our welfare state and public
service model continues to depend partly on informal and private provision,
satisfying needs but favouring poor employment conditions. Second, the
sustainability of the model depends on reducing costs. A good example of this
is the continuing deterioration of employment conditions in public services in
recent years, even before the application of austerity policies. Finally, a weak
public sector is less able to manage crisis situations. These limits are found in
1
In parenthesis, the contribution of these sectors to job creation in the 1994-2007 period.
2
the management of aggregate demand, in income policies, and in the
measures aimed at mitigating the negative effects of the crisis.
These regressive trends that directly affect employment quality have been
strengthened by changes in the labour legislation. Reform after reform, the
dynamics of the labour market has been one of increasing precariousness,
facilitating a growth model of low wages, in which labour relations voided of
content focus mainly on pay bargaining (Pérez Infante 2011). With the benefit
of hindsight, the years before the crisis saw the gradual formation of a labour
relations model in which the social dialogue and the role of trade unions
declined. The crisis reinforced this dynamic and the 2012 labour reform put
an end to the model of industrial relations that had been established in the
1980 Workers’ Statute. As we will see below, the reforms resulted in more
vulnerable employment conditions and in a significant increase in managerial
prerogatives and job insecurity.
3. Sectoral change from 2008
The crisis led to an intense destruction of employment and, together with
Greece, Spain was the country with the highest number of job losses within
the EU. This trend in employment is largely explained by the characteristics of
the production structure that had been established in the period of expansion
and subsequent collapse. The activities that had driven growth were precisely
those that collapsed rapidly, and it is this fragility of the production structure
(rather than labour regulation as has conventionally been argued) that
explains the strong impact of the crisis in Spain in terms of employment
(Table 1). However, it is interesting to note some aspects of the changes in
employment during the crisis.
The crisis can be divided into three distinct periods. The first was between
the first quarter of 2008 and the first quarter of 2011, a period in which the
austerity policies had not yet been conclusively applied. Job destruction was
high in the activities that had been the main drivers of growth (construction,
retail and hospitality) and also in industry. Two factors explain this trend: the
decline in activities directly related to construction and the decline in the
sectors that most suffered the fall in international demand. This was the case
in the automotive sector and some other sectors with a high level of exports.
Other activities in recession were agriculture, other services (mainly personal
services), and financial activities (affected by the restructuring of banks).
However, some jobs were also created. Expansionary policies applied in the
early years of the crisis allowed an increase in employment in activities
related to the public sector: public administration, health and social services,
and education.
The second period covers the years 2011 to 2013, when austerity policies
were applied with greater intensity and job flexibility was increased by two
labour reforms. Job destruction continued in the same sectors as in the
previous period, but with slight changes: the car industry was no longer a jobdestroying sector and falling industrial employment was now due more to the
internal recessive dynamics of the construction sector than to developments
in the external sector. However, the most significant change that occurred in
3
this second phase of the crisis was that the austerity policies led to heavy job
losses in the public sector (Recio 2013). The role of containment that public
employment played in the early years of the crisis came to an end and the
public sector became one of the drivers of job destruction. The few jobs
created were in other services (personal services) and agriculture.
Table 1. Change in employment by economic activity in Spain, period 2008Q1-2015Q1
2008Q1-2011Q1
Economic activity
2011Q1-2014Q1
2014Q1-2015Q1
(000)
in %
(000)
in %
(000)
in %
-2193,8
-10,6
-1475,6
-8,0
504,2
3,0
Agriculture, forestry and fishing
-92,1
-10,6
31,1
4,0
-91,7
-11,3
Mining and quarrying
-10,5
-19,6
-9,5
-22,0
-5,2
-15,5
Manufacturing
-776,4
-25,0
-266,3
-11,4
114,9
5,6
7,8
10,7
8,8
10,9
10,3
11,5
Total
Electricity, gas, steam and air conditioning supply
Water supply; sewerage, waste management and
remediation activities
Construction
Wholesale and retail trade; repair of motor vehicles and
motorcycles
5,1
4,4
-13,2
-10,9
22,5
20,9
-1180,1
-44,0
-557,3
-37,2
118,5
12,6
-285,6
-8,8
-130,4
-4,4
83,7
3,0
Transportation and storage
-40,9
-4,3
-79,6
-8,7
-9,4
-1,1
Accommodation and food service activities
-81,4
-5,8
-55,8
-4,2
87,1
6,9
J Information and communication
-20,4
-3,8
-20,7
-4,0
7,9
1,6
Financial and insurance activities
-54,6
-10,4
-7,3
-1,6
-18,8
-4,1
Real estate activities
-28,8
-23,4
1,8
1,9
6,2
6,5
Professional, scientific and technical activities
-44,1
-4,9
-34,8
-4,1
61,2
7,4
Administrative and support service activities
Public administration and defence; compulsory social
security
-3,7
-0,4
-61,1
-6,6
43,7
5,1
223,1
17,9
-184,7
-12,6
48,5
3,8
Education
55,8
4,7
-45,7
-3,7
-10
-0,8
Human health and social work activities
218,3
18,1
-25,2
-1,8
14
1,0
Arts, entertainment and recreation
40,7
13,9
-4
-1,2
18,4
5,6
Other service activities
Activities of households as employers; undifferentiated
goods- and services-producing activities of households for
own use
-74,9
-16,9
31,2
8,5
6,1
1,5
Activities of extraterritorial organisations and bodies
-52,6
-7,1
-52
-7,5
-3,7
-0,6
1,3
59,1
-0,9
-25,7
0
0,0
Source: Own calculation from LFS
The third period began in the first months of 2014, when a timid recovery
began to be seen in the Spanish economy. Although jobs are still being
destroyed in some sectors, such as agriculture (due to its age-old tendency to
lose jobs and perhaps also to seasonal factors in the period analysed) and
financial activities (still being restructured), in the vast majority of sectors
employment has increased (see Table 1).
The first question that we can ask is whether the crisis has led to a significant
sectoral reorganization and the adjustment has laid the foundations for a new
production model. If so, in the expansive phase employment growth could be
expected to take place in different activities than those of the pre-crisis
expansionary phase. The analysis of the data does not support this hypothesis.
Quite the opposite: although the period under consideration is brief, the
strong concentration of job creation in a few activities suggests a return to
4
the previous model, with no signs of a major transformation. However, some
points should be noted.
The first feature to note is that the traditional sectors that were the basis of
growth are still present in this new phase of growth. For example, there has
been strong job creation in the construction, hospitality and retail sectors.
Other sectors in which jobs are being created—and which could contain new
activities—are industry, professional activities, administrative activities and
public administration. 2 In industry, job creation focuses primarily on the
manufacture of vehicles and metal products. There is therefore no significant
growth of new activities. The only noteworthy feature is a slight increase in
employment in the pharmaceutical and food industries. With regard to
professional activities, job creation is mainly concentrated in three areas:
legal and accounting activities; head office activities, business consultancy
and management; and technical architecture and engineering services, testing
and technical analysis. Administrative activities are occupations related partly
to office work but above all to gardening and security. Finally, in the public
administration much of the increase in employment is due to the political
cycle and the proximity of elections rather than to a commitment to recover
employment in the public sector.
Overall, there do not appear to have been any significant structural changes
indicative of a profound transformation of the production structure, as was to
be expected because no industrial policies with this aim have been
implemented (also difficult to apply within the current European political
framework). This absence of change in the production structure means that
wage moderation and flexible employment continue to be the basis of
competitiveness in Spain, whereas more inclusive proposals targeting greater
labour integration and better employment conditions have not been fostered.
4. Quantitative flexibility: a change of model?
One of the features of the Spanish labour market has been the high rate of
temporary employment. Orthodox economists consider that the cause lies in
excessively rigid job protection measures, which encourage companies to
recruit on temporary contracts to avoid the high costs of dismissal. These
economists consider that the ease of use of temporary employment could
explain both the high volatility of employment in Spain and its great elasticity
against fluctuations in economic activity. They also consider that temporary
employment operates alongside excessively rigid standards of protection for
permanent workers, resulting in a dual labour market: some workers are
permanently stable, whereas others bear the full cost of the employment
adjustment (Dolado et al 2002).
In our point of view this is an overly simplistic view that holds only when the
data are analysed in aggregate. Disaggregated by sectors and case studies, a
more complex reality emerges. First, the use of temporary employment varies
2
The contribution of these activities to employment growth from the first quarter of 2014 to
the first quarter of 2015 is as follows: Construction 18%, industry 18%, hospitality 14%, retail
13%, professional activities 10%, public administration 8%, administrative activities 7%.
5
greatly between sectors of the Spanish economy (Table 2), and a large part of
the temporary employment is in the large sectors that employ a high volume of
temporary labour (construction and tourism). Second, permanent contracts are
not immune to the situation of the economic cycle. In situations of prolonged
depression, stable employment decreases significantly. In fact, in the 1991-94
crisis net job destruction only took place in stable employment. Third, the public
sector has played an important role in recent years in generating temporary
employment. In particular, the government has applied neoliberal policies aimed
at weakening the large education and health sectors, either by making public
employment more unstable or through outsourcing. Finally, the uncertainty and
instability of some activities significantly favours the use of temporary contracts.
Table 2. Temporary employment rate (in %) by economic activity in Spain
2008Q1
2011Q1
2014Q1
30,0
24,6
23,1
Total
60,7
58,4
66,6
Agriculture, forestry and fishing
14,4
11,8
13,6
Mining and quarrying
22,0
16,9
17,1
Manufacturing
18,0
13,0
14,3
Electricity, gas, steam and air conditioning supply
Water supply; sewerage, waste management and
remediation activities
Construction
Wholesale and retail trade; repair of motor vehicles and
motorcycles
Transportation and storage
Accommodation and food service activities
J Information and communication
Financial and insurance activities
Real estate activities
Professional, scientific and technical activities
Administrative and support service activities
Public administration and defence; compulsory social
security
Education
Human health and social work activities
Arts, entertainment and recreation
Other service activities
Activities of households as employers; undifferentiated
goods- and services-producing activities of households
for own use
Activities of extraterritorial organisations and bodies
2015Q1
23,6
59,8
15,0
18,8
12,1
21,4
51,2
15,7
40,8
10,4
33,3
14,9
38,7
24,1
22,1
36,2
20,9
11,6
16,8
23,7
29,7
17,1
17,2
33,0
19,2
8,5
13,6
19,8
26,4
19,3
20,0
36,8
18,9
6,3
12,8
18,9
21,1
19,6
18,7
34,2
18,2
8,5
18,6
18,4
22,6
22,0
28,9
31,5
37,1
27,2
20,4
25,8
28,4
34,0
24,6
14,9
24,4
24,8
31,1
20,2
17,6
24,9
25,4
31,9
25,5
37,4
nd
33,5
nd
25,1
nd
24,6
nd
Source: Own calculation from LFS
During the crisis, temporary employment has shown a cyclical pattern. In the
first phase there was a sharp reduction, largely because of the heavy job losses
in construction and because industrial enterprises reduced temporary
employment as a means of making a short-term adjustment. As this first
adjustment is coming to an end, temporary employment is flourishing again
(Figure 1), despite the fact that the two labour reforms of the period (2010 and
2012) made it easier and less expensive to dismiss employees on open-ended
contracts. In part, this “recovery” of temporary employment can be explained by
the increased activity in the sectors in which it is most common. In fact, there is
some structural inertia (Toharia 2005), and in sectors in which temporary
employment has been high, it is again increasing rapidly. Furthermore, the crisis
6
has led enterprises and the public sector to use types of recruitment aimed at
limiting the use of labour, and this translates into short-term contracts.
Figure 1. Changes in employment, permanent and fix term contracts and part time work
(2005Q1=100)
140.0
120.0
100.0
80.0
Total employment
Permanent contracts
60.0
Fix term contracts
40.0
Part time work
20.0
0.0
The most significant change has occurred in part-time employment (Figure 1),
traditionally considered uncommon in the Spanish labour market, although
there are indications that this is partly because informal employment (e.g.
domestic cleaning, elderly care, etc., usually done informally by women and
mostly part-time) has been undervalued. It is now an expanding form of
employment and during the crisis it has shown strong growth, largely because
companies have tried to reduce working time and minimize labour costs.
Some sectoral studies (Castillo 2013; Moreno et al 2014) also note that parttime employment is used as a mechanism to force an increase in work rates
by combining short-term contracts with stipulation of the tasks to be done,
leading to an intensification of the rate. The growth of these jobs is often
associated with outsourcing of activities to service companies or temporary
employment agencies (very common, for example, in cleaning and
hospitality). There is also evidence that this type of contract is being used as
a way to avoid paying taxes and social contributions. In fact, it is fairly
common for workers on a part-time contract to be actually working full time.
All of this makes part-time work ideal for generating working poor and
increasing the precariousness of employment (Blazquez and Moral 2013; Recio
et al 2015).
Various aspects of the development of part-time contracts are noteworthy.
The first is that most people with part-time jobs—including the women who
make up the majority of part-time workers—are in this situation because they
cannot find full-time jobs (Table 3). In addition, as the importance of this
form of employment has increased, the proportion of involuntary part-time
workers has also increased. This situation can be explained by a combination
7
of several factors. First, there is no public income supplement system to
compensate for low wages in current income and in future pension
entitlements. Second, the crisis of male employment directly affects working
class household income, and the part-time income of the members of the
household is insufficient. Third, cultural changes in Spanish society mean that
a growing percentage of women aspire to financial independence that is not
guaranteed by the part-time employment model (largely a simple variation of
the Victorian family model). Therefore, part of the unemployment is
camouflaged by growing underemployment, which may involve workers who
were previously in full-time formal employment.
Table 3. Part time employment over total employment and involuntary part time work
(people working part time because they do not found a full time employment) in Spain
% part time employment over total
employment
Involuntary part time work
Period
Total
Male
Female
Total
Male
Female
2005
12,6
4,8
24,2
32,3
30,3
32,9
2006
12,0
4,5
22,9
32,7
32,5
32,7
2007
11,8
4,3
22,4
32,3
31,4
32,6
2008
11,8
4,2
22,2
33,6
30,7
34,4
2009
12,7
4,8
22,8
42,7
46,5
41,6
2010
13,2
5,5
23,1
49,7
54,0
48,3
2011
13,9
6,1
23,4
53,5
60,3
51,4
2012
14,7
6,7
24,2
56,4
62,6
54,4
2013
16,1
8,2
25,6
62,3
66,6
60,7
2014
16,4
8,2
26,1
63,4
69,3
61,1
Source: Own calculation from LFS. Second quarter of each year
The second noteworthy aspect is the strong increase in part-time employment
among men. This dynamic suggests that new ways of managing quantitative
labour flexibility may be emerging, in which labour costs are reduced by
adjusting contracts closely to the time needed for the activity. The evolution
of part-time employment by sectors (Table 4) shows a significant increase in
tertiary activities and also in sectors in which this form of employment was
formerly unusual (e.g. construction and industry, both very masculinized).
Also noteworthy is the increase in activities with a strong presence of the
public sector, such as education and health. Finally, it should be noted that
the increase in part-time employment is also occurring in the sectors in which
temporary employment is increasing significantly. The combination of these
two forms of flexibility makes the conditions of employment even more
precarious.
8
Table 4. Part time employment over total employment by economic activity in Spain
2008Q1 2011Q1 2014Q1 2015Q1
11,8
13,9
16,2
16,3
Total
9,2
9,3
9,9
8,7
Agriculture, forestry and fishing
1,5
3,9
1,8
2,8
Mining and quarrying
4,2
4,7
6,0
5,8
Manufacturing
3,3
2,7
4,3
2,4
Electricity, gas, steam and air conditioning supply
Water supply; sewerage, waste management and
remediation activities
Construction
Wholesale and retail trade; repair of motor vehicles and
motorcycles
Transportation and storage
Accommodation and food service activities
J Information and communication
Financial and insurance activities
Real estate activities
Professional, scientific and technical activities
Administrative and support service activities
Public administration and defence; compulsory social security
Education
Human health and social work activities
Arts, entertainment and recreation
Other service activities
Activities of households as employers; undifferentiated
goods- and services-producing activities of households for
own use
Activities of extraterritorial organisations and bodies
5,4
2,7
5,5
5,2
9,6
6,3
6,5
7,4
13,6
6,4
18,1
8,2
6,0
14,9
10,7
26,4
4,3
19,4
11,7
27,8
15,9
14,8
7,3
24,0
8,2
5,8
11,7
11,6
28,8
4,9
18,7
14,4
29,2
20,8
17,4
8,4
29,2
8,0
5,1
17,5
14,1
31,7
4,8
22,0
16,5
32,4
21,0
17,9
8,3
27,3
7,4
6,7
20,7
12,4
30,7
5,3
23,0
17,0
32,1
21,9
51,0
nd
49,0
nd
50,9
nd nd
54,4
Source: Own calculation from LFS.
5. Changes in collective bargaining
The 2012 labour reform is undoubtedly the most radical of the many that have
been implemented in Spain. Some of the measures taken follow the line
initiated in previous reforms: making dismissal easier and less expensive, and
increasing managerial prerogatives on work organization and wage setting.
However, the transformation has been most radical in the field of collective
bargaining (Pérez 2013). The model previous to the reform had long provided
a floor of social rights to millions of workers, despite the low level of union
membership and the predominance of small businesses in the employment
structure. The Spanish collective bargaining system is complex, with
agreements at enterprise level and at sector level. The former are usually
predominant in large companies where there is greater trade union
organization. Sectoral agreements (which may be national, regional or
provincial, according to the sector) cover most small companies, even those in
which there is no union representation (Fina et al 2001). This is because the
Spanish laws recognize trade union representativeness on the basis of the
trade union elections of the companies in each sector rather than on the basis
of affiliation. Elections usually occur only in companies with more than 50 or
100 employees, but the results obtained in these companies affect the
representativeness throughout the sector. The large trade unions have thus
negotiated agreements covering the working conditions of all companies in
9
the sector, regardless of the representation that they have at company level.
In addition, the labour laws include a clause on “ultraactivity”, which
presupposes that, on expiry of a collective agreement (usually negotiated for
periods of 1-3 years), its conditions are maintained until a new agreement is
signed. In fact, this mechanism was designed to encourage the adoption of
previous agreements as a basis for bargaining.
The new labour reform is attempting to destroy this whole mechanism in
various ways: it encourages companies to stop applying all or some of the
conditions of the agreement if they can allege economic reasons; it give
priority to the enterprise agreement rather than the sectoral agreement;
allows a negotiating mechanism with employee representation elected
without union guarantees; and it reduces “ultraactivity” to one year. After a
year the agreement is extinguished, and it is uncertain what rules should
apply. The law provides that a similar agreement should be applied, but it is
not clear what will happen in the case of enterprise agreements and specific
sectors, for which there is no similar agreement. Some companies have
decided that only the basic rules of the Workers’ Statute need to be applied,
so they have cut pay to the level of the minimum wage.
Figure 2. Colective agreements trend
14000
12000
10000
8000
6000
4000
2000
0
Number of collective agreements in force
Number of employees covered by
collective agreements (000)
In many cases employers have used the rules strategically to curb collective
bargaining in the hope that, when the old agreement expires, the bargaining
conditions will be more favourable to them. According to official figures, the
first effect of this policy has been the dramatic decline in the number of
workers covered by collective agreements (Figure 2). There is as yet
insufficient empirical evidence to know what has happened to the working
conditions of those not covered by an agreement. Social conflict is
increasingly moving into the courts, which have often determined that,
though the agreements have expired, the individual workers still retain their
rights and wages. Collective regulation of the agreement is thus transferred to
individual rights. The situation of these workers is frozen but, because their
rights are individual, a new type of discrimination arises: companies may
change the conditions of employment of new employees at their discretion.
7000
6000
5000
4000
3000
2000
1000
0
años
employees
collective agreements
10
The transformation of the collective bargaining model has led to a reduction
in pay. Aggregated data of the survey on wage costs do not allow for an
accurate assessment because they are influenced by the composition effect 3
(changes in the structure of employment by occupation and sector) and
seasonality. The survey on pay structure provides more detailed information,
but the last year available is 2012, so the effects of the latest labour reform
cannot be assessed (Table 5).
Table 5. Wage distribution in Spain 2008-2012
2008
2009
2010
2011
All
average 21883,42 22511,47 22790,2 22899,35
median 18244,4 18803,28 19017,09 19303,51
Women
average 18910,62 19502,02 19735,22 19767,59
median 15886,02 16433,14 16536,1 16796,41
Men
average 24203,33 25001,05 25479,74 25667,89
median 20057,56 20730,71 21206,99 21487,99
Source: Wage structure survey, INE
2012
22726,44
19040,98
19537,33
16524,51
25682,05
21425,14
Nevertheless, there is a clear trend towards wage decline. There has also
been an increase in the number of employed persons who fail to earn the
annual minimum wage (because of the proliferation of part-time and/or shortterm jobs) and in the already high proportion of people with less than twice
the minimum wage (Figure 3). These findings indicate the predominance of a
low-pay market (and agricultural wages, always low, are not included in these
figures).
Figure 3. % of workers according to their incomes related to the Minimum Wage
3
For example, a report by the Studies Service of the Spanish Central Bank shows that
an alleged increase in labour costs at the beginning of the crisis was due only to the
change in the composition of employment: the highest proportion of jobs destroyed
were low-pay jobs, so the average wage cost of those who kept their jobs rose (Puente
and Galán 2014).
11
6. Unemployment and poverty
The effects of the crisis go far beyond employment and have their most visible
impact in the strong increase in unemployment. Much time will be needed to
compensate for the enormous number of jobs lost in the seven years of crisis,
two long periods of recession, and adjustment policies that themselves caused
the second recession. In fact, part of the decline in unemployment is due to a
reduction in the labour supply from mid-2012. This reduction is explained by a
new migratory flow (foreign workers returning to their country and young people
seeking employment abroad), something that had not taken place in Spain
since the early 1970s, and by the “discouraged worker” effect, by which
unemployed workers are statistically converted into inactive workers. The other
face of unemployment is increasing inequality and poverty that have raised
dramatically (Fundación Foessa 2013) (Tabla 6).
Table 6. People in risk of poverty or social exclusion (Strategy Europa
2020)
2009
2010
2011
2012
2013
2014
29,2
Total
24,7
26,1
26,7
27,2
27,3
29,4
Men
23,8
25,5
26,1
27,3
27,9
28,9
women
25,6
26,7
27,4
27,2
26,7
Source: Living conditions survey
Unemployment always involves a loss of income, just as part-time employment
involves low income. Preventing workers in these situations from falling into
poverty depends not only on the labour market but also on the social protection
system. Countries with high rates of part-time employment, such as Denmark,
Sweden and the Netherlands, have low rates of poverty thanks to relatively
generous family support policies. The same applies to unemployment. This is
not the case in Spain in either of the two fields: the family protection system is
12
very weak and the unemployment protection system is insufficient to guarantee
income to the long-term unemployed (Addabbo et al 2012).
The Spanish unemployment protection system consists of two levels:
contributory benefit and welfare benefit. Contributory benefit marks the right of
entry to the entire system. To receive this benefit, workers must have
contributed for at least six months, which excludes persons entering the labour
market for the first time or returning to it, and those who have had short-term
jobs. The period of benefit varies according to the number of monthly
contributions, but the maximum is 24 months after 48 monthly contributions.
The amount of benefit is based on the value of the contribution (the base
salary). It is initially 80% of the base salary (with a maximum of 1.7 times the
minimum wage) and decreases in each six-month period to reach 50% in the
last period. When this mechanism has been exhausted, welfare benefits can be
obtained by people with special personal characteristics (people over 45, with
family responsibilities, with low income, etc.) and for a maximum period of 11
months (except for persons over 55, who are in fact considered to be outside
the labour market).
Persistent unemployment has reached such a high level that in 2010 a new type
of benefit, integration income, was created for persons who have been
unemployed for over a year without benefit and with specific characteristics.
They receive 11 months’ benefit in exchange for agreeing to carry out an
integration plan designed by the employment services. There is also a separate
scheme for seasonal agricultural workers in southern Spain. These three types
of welfare income (welfare benefit, the integration income and benefit for
agricultural workers) are all of the same amount: 80% of the IPREM (an index of
income approved each year by the Government, which is lower than the
minimum wage; it is currently €425 per month). All unemployed people who
receive some form of benefit may also be called on to carry out unpaid
community work. It should also be noted that the Spanish minimum wage has
undergone a permanent real depreciation in the last 20 years (except for a
slight increase in 2005-2008) and is situated close to the level of relative
poverty. All non-contributory benefits are clearly below this rate.
Two facts show the lack of generosity of the Spanish system of unemployment
protection. The first is its coverage ratio: the percentage of unemployed people
who receive benefit. The official figures of coverage show serious shortcomings.
The numerator includes all people receiving some form of unemployment
benefit. The denominator includes the number of people registered as
unemployed in the employment offices. This is a problematic figure. The
number of people registered as unemployed does not take into account the
unregistered unemployed (especially people who are not entitled to benefit)
and, in addition, the unemployment census is adjusted by the employment
service with opaque criteria (e.g. it is known that the unemployed who receive
training are taken off the register; paradoxically they are counted in the
numerator as earners of income but they are not counted in the denominator).
We have therefore calculated an index of coverage that includes in the
denominator the number of unemployed in the Survey of the Working
Population, which is drawn up with a clearer and approved methodology.
Both calculations show a common denominator (Figure 4): the sustained fall in
the coverage ratio from 2010, indicating that an increasing percentage of
13
unemployed receive no income. The difference is in the level: according to
official figures the percentage of unemployed without income is more than 40%
of the total, whereas according to our calculation it is more than 50%. A recent
study with microdata from the Survey of the Working Population (Negueruela
2015) has shown that the reality is even worse. The reason is that some
claimants of benefit are not unemployed in a statistical sense: they are early
retirees (people of advanced age, usually over 57, who have lost their jobs in
restructuring processes and have been integrated into a scheme that
guarantees their income until retirement and allows them to draw the
unemployment benefit to which they are entitled). The study estimates that the
coverage of benefit for the unemployed was 29.24% in the first quarter of 2015,
9.64 points below the level of 2011. There are also great inequalities based on
age (older people enjoy the greatest coverage because they have contributed
for a longer time when they lose their jobs and because of the very nature of
welfare benefit), sex (men are more protected) and region (regions with higher
unemployment such as Murcia, Andalusia and the Canary Islands have
significantly lower rates of coverage).
Figure 4 Unemployed receving benefits
90
80
70
60
50
AT REG
40
AT EPA
30
20
10
0
2007
2008
2009
2010
2011
2012
2013
2014
We should take into account not only the percentage of people receiving benefit
but also the number. There is an important difference between contributory
benefit and welfare benefit. It is therefore meaningful to determine the
percentage of claimants of each type of benefit. In 2010, 60% of unemployed
persons entitled to benefit received contributory benefit and 40% received
welfare benefit. At the end of 2014 the percentage of contributory benefit had
fallen to 41.3% according to the unemployment figures of the employment
services. However, if we use the LFS unemployment figures to calculate the
number of people receiving contributory benefit, it drops to 18.6, and it could be
even lower according to the analysis by Negueruela. Therefore, a large number
of Spanish unemployed receive no benefit and many more receive only povertylevel benefit (Table 7).
14
Table 7. Anual net income by person (over 16 years old) in relatioship with
the economic activity
2008
2009
2010
2011
2012
2013
10.904
Total
11.855
11.835
11.362
11.297
11.068
12.289
Employees
13.365
13.448
13.015
13.028
12.563
7.031
Unemployed
8.743
8.360
8.114
7.792
7.608
13.236
Retired
12.652
12.911
12.368
12.887
13.049
9.476
Other inactive
9.964
9.977
9.611
9.605
9.630
Source: Living conditions survey
This leads to two conclusions. The first is that the high Spanish unemployment
rate cannot be explained by questions of supply if the vast majority of the
unemployed receive no benefits or insufficient benefit. The second is that the
benefit system translates unemployment into increased poverty and inequality,
as is shown in the deprivation index and the Gini index for Spain. The question
is how do people subsist? The answer is strong family solidarity (including even
sharing the retirement income of parents), a resurgence of the informal
economy (although some of it is more pro-cyclical than cyclical) and the
traditional networks of charity, many of them linked to the Catholic Church,
which have been reactivated in recent years.
7. Conclusion: What is the best model for overcoming the
crisis?
In our first contribution to the analysis of the crisis in Spain (Banyuls and Recio
2012), we presented the changes that we considered key for best overcoming
the situation and we also made a forecast of where things could go if these
changes were not made. We felt that the most crucial elements affecting the
economy and employment in Spain were an inadequate production structure
(which led to repeated deficits and foreign debt), insufficient development of the
public sector (in terms of welfare and of fostering a change in the type of
production), and excessive inequality caused by insufficient public policies and
downward pressure on wages in business management policies. (Reducing
these inequalities would greatly reduce social suffering and could promote a
more cooperative production model, more oriented towards quality and more
environmentally sustainable). We also suggested that if these changes were not
made, the result could be that, instead of moving towards the Northern
European route (which is the aspiration of much of the population), Spain is
heading towards the Latin American route of societies with very high inequality
and a public sector that is unable to meet the collective needs.
After eight years of crisis, hardly anything has been done to deal with the
production structure. Furthermore, the current economic recovery continues to
focus on sectors that have dominated the national economy in recent years.
The development of the public sector and inequality have even worsened as a
result of the cuts and structural reforms applied in Spain. These reforms were
imposed by the EU leadership in return for the rescue of the Spanish banking
15
system, but were often adopted enthusiastically by local elites. And the results
suggest that we are approaching an unacceptable evolution: unbearable
employment rates that will continue in time according to all forecasts, growing
inequality, poverty, formal underemployment (part-time jobs), informal
underemployment, and deterioration of public services, which will be replaced
partially by private charities. Informal employment has always been present in
Spain but it has perhaps shown the lowest rates of growth, not because there
are no people willing to “make a living” (as is patent in the number of garbage
scavengers in large cities), but because activities such as street vending are
subject to repression. Nevertheless, informal employment may increase in scale
if the context does not change. Spain’s problems are common to those of other
Southern countries. We therefore think that without a regional approach for
Southern Europe the decline will persist, and the current recovery is just a short
episode in a general context of crisis.
Bibliography References
Addabbo T.; García-Fernández, R.; Llorca-Rodríguez, C.; Maccagnan, A.
(2012), “Poverty and Unemployment: The Cases of Italy and Spain”, in
G. Parodi and D. Sciulli (eds.), Social Exclusion, AIEL, Series inLabour
Economics, Springer-Verlag, Berlin Heidelberg.
Banyuls, J., Recio, A. (2012), “Spain: the nightmare of Mediterranean
neoliberalism”, in Lehndorff, S. (ed), A triumph of failed ideas.
European models of capitalism in the crisis, Brussels, ETUI:199-216.
Banyuls, J.; F. Miguélez; A. Recio; E. Cano and R. Lorente (2009) “The
transformation of the Employment System in Spain: Towards a
Mediterranean Neoliberalism?”, in G. Bosch, S. Lehndorff and J, Rubery
(ed) European Employment Models in Flux, Palgrave Macmillan.
Blázquez, M.; Moral, J. (2014): “El empleo a tiempo parcial femenino.
“Flexiriesgo” en cinco países europeos”, Revista Internacional del
Trabajo, vol 133, nº 2, pp. 299-324.
Castillo, J.J. (2013): “Nuevas tendencias de organización en las relaciones
laborales en la crisis: trabajar en cliente y trabajar en proyecto”,
Anuario de Relaciones Laborales de España 4: 54-66.
Consejo Económico y Social (2013), Distribución de la renta en España:
desigualdad,
cambios
estructurales
y
ciclos,
Madrid,
CES.(http://www.ces.es/documents/10180/526241/Inf0313.pdf)
Dolado, J.; García Serrano, C.; Jimeno, J.F. (2002): “Drawing lessons from the
boom of temporary Jobs in Spain” Economic Journal, 112.
Fina, L.; González, F.; Pérez J. I. (2001): Negociación colectiva y salarios en
España, CES Madrid.
Fundación Foessa (2013), Desigualdad y derechos sociales, Madrid: FoessaCáritas.
Miguélez, F. and A. Recio, (2010) “The uncertain path from the Mediterranean
welfare model in Spain”, in D. Anxo, G. Bosch and J. Rubery (ed) The
16
Welfare State and Life Transitions. A European Perspective,
Cheltenham: Edward Elgar.
Moreno, S., Godino, A. y Recio, A. (2014): “Servicios externalizados y
condiciones laborales. De la competencia de precios a la presión sobre
el tiempo de trabajo”, Sociología del Trabajo, 81: 50-67.
Perez Infante, J.I. (2011) “La negociación colectiva y los salarios en España”
Cuadernos de Relaciones Laborales vol 21.
Pérez, F. (2013), “La contrareforma laboral”, Anuario IET de Trabajo y
Relaciones laborales, Vol. 1. Barcelona.
(http://revistes.uab.cat/anuarioiet/issue/view/v1)
Prieto, C. (coord.), Arnal, M.; Caprile, M.; Potrony, J. (2011), La calidad del
empleo en España: Una aproximación teórica y empírica, Madrid,
Ministerio de Trabajo e Inmigración.
Recio, A (2013) “2012: la segunda recesión” Anuari de l’Institut d’Estudis del
Treball Barcelona, IET.
(http://revistes.uab.cat/anuarioiet/issue/view/v1)
Recio, A., Moreno, S.; Godino, A. (2015): “Out of sight. Dimensions of working
time in gendered occupations” in Holgrewe, Ursula, Ramioul,
Dominique and Vassil Kirov (ed) Hard times in new jobs Palgrave
Macmillan (forthcoming).
Toharia, L. (2011): “El debate sobre las reformas necesarias para la economía
española: el mercado de trabajo”, Gaceta Sindical nº 17, pp. 201-236.
Toharia, L. (dir), (2005), El problema de la temporalidad en España: un
diagnóstico, Madrid, Ministerio de Trabajo y Asuntos Sociales.
17