Labor reform in Spain will limit the scope of temporary contracts

The Spanish government reached an agreement on labor matters with unions and employers, according to the Spanish Ministry of Labor reported on Thursday, ending months of negotiations and taking a further step towards the cancellation of the reforms of the previous conservative government of the Popular Party.

The new agreement gives unions more power in collective bargaining negotiations, will limit the scope of companies’ temporary contracts and make permanent an approved temporary layoff plan to cushion the economic impact of the Covid-19 pandemic.

“We finished 2021 fulfilling the Government’s commitment: a new labor legislation that recovers rights in favor of decent work,” the Minister of Labor and Second Vice President of the Spanish Government, Yolanda Díaz, wrote on social media.

The reform of its labor system is one of the commitments made by Spain before the European Commission to obtain the second tranche of European funds to recover from the pandemic.

Spain expects to receive a total of 70,000 million euros (79,140 million dollars) in total, of which only 19,000 million euros have been received so far.

It is “a historic day for workers in our country,” the Minister of Labor, Yolanda Díaz, leader of the radical left, a minority partner of the Socialists in the government coalition, congratulated journalists.

The agreement was reached with the two main employers ‘organizations, the CEOE and CEPYME (of small and medium-sized companies), and with the two large unions, the Workers’ Commissions and the UGT.

The controversial labor reform of 2012 was agreed as a condition for the rescue of Spanish banks, concentrating collective bargaining in companies with little union representation.

This led to the creation of new companies that paid salaries below the sectoral agreements, unleashing tensions with the unions but also among some companies, which saw in this practice something similar to unfair competition.

Companies will maintain the right to flexibility in matters such as working hours, while wages will be set through sectoral agreements, where unions have bargaining power.

Given that Spain is the country in the European Union with the greatest use of temporary contracts, the new regulations toughen the conditions for their use, limiting them to short periods of time in which they are justified.

The inappropriate use of temporary contracts will be penalized with fines and penalties from Social Security.