A thorough analysis of hiring data continues to give mixed signals about the effects of labor reform. Although the overall picture This is clearly positive.more indefinite and less temporary, the evolution of each type brings nuances which may be contradictory with the design of the standard. One of them is that The percentage of new permanent employees signing more than one contract per month: has increased fivefoldincreasing from 1% of the total in 2021 (1,440 people) to 5% (with 18,872 affected).
The State Public Employment Service (SEPE) estimates that last August, 861,386 people signed 1,040,159 contracts, which gives youan average of 1.12 contracts per personA relationship that can also be expressed by the fact that 21% (20.79%) of employees have signed more than one contract. There are 178,773 people, according to these records.
In any case, this represents a substantial improvement. by 33% in August 2021 and 37% in the same month of 2019which in turn marks the maximum of the historical series. We have to go back to 2006 to find a ratio like the one observed this year, which confirms a clearly positive effect of the labor reform. Although questions arise when analyzing what happened with each type of contract separately.
In August, 370,863 people signed 389,735 permanent contracts, which represents an average of 1.05 contracts per person (i.e. 5% of permanent contracts sign more than one contract per month). In addition, 5,510,096 workers signed 650,424 contracts, which shows an average of 1.28 people per contract (either a rate of 28% of employees: 140,328).
It is clear that the sum of people signing each type of contract is greater than the total, i.e. 2.23% more, 19,573 “additional” people. How is this explained? Because they are those who sign a contract of both categories in the same month, but they are not counted twice in the overall figure.
In August 2019, the gap was 0.5%, which is equivalent to 6,703 people.. Its increase after the labor reform can be due to several causes: such as an increase in the number of conversions of temporary to permanent (either directly or after a new contract); or to people who, after losing a permanent job (for example because they did not pass the trial period), obtain a temporary one. In any case, confirm a slight increase in indefinite contractual volatility since the labor reform.
This development is consistent with what happened with permanent employees. The aforementioned 5% of employees signing more than one permanent contract contrasts with the average of 1% recorded recording in the entire historical series since 2006.
More fixed, more volatile contracts
The increase was recorded in 2022, the first year of application of the standard, and in August 2023 it even amounts to 6%. The Executive attributed this to the adaptation of companies to the legal change, especially at a time of recovery of activity after the pandemic, and to the fact that more people signed a permanent contract than ever (the figure for August is multiplied by three in the same month of 2019).
But this argument runs into the fact that the ratio of people per contract does not depend on the volume of either, since it is a ratio.
The intensity of the increase, which is multiplying by five the pre-reform dataas well as the fact that it is maintained in the third summer with this entry into force also contrasts with the statement of the Executive that the reform has not introduced changes in permanent contracts. If this were the case, it would remain at the level of 1%.
The truth is that there has been a change that has affected the figure of discontinuous permanent contracts, a type of permanent contract that alternates periods of activity and inactivity in which they can combine other contracts. The reform aimed to generalize its use in all types of companies, including ETTs. Although the SEPE data do not detail their situation, which leaves the door open to another hypothesis: that the restriction of temporary hiring has transferred some of its volatility (voluntary or involuntary) to ordinary indefinite.
In fact, temporary hiring has probably reduced its volatility after the reform. 28% of new employees of this type signed more than one contract per month, compared to the record of 41% reached in August 2018. This seems consistent with the fact that fewer temporary contracts are being signed and that by eliminating employment and service contracts, Temporary work conditions have become more difficult.
The quality of the temporary employment contract
However, the data also reveal a relevant detail: temporary contracts signed today are less stable than before the financial crisis, when the rate of people signing more than one temporary contract was 23%. This is despite the fact that then there were employment and service contracts and casual employment had a much greater weight.
If we analyze the evolution of the months of August, we see that the number of people who sign more than one temporary contract per month increases with the financial crisis, but even more so with the start of the recovery, from 2012.
This is despite the fact that that year a labor reform was approved, that of the executive of Mariano Rajoy, which reduced the cost of dismissal and clarified the causes of dismissal, following the thesis that companies would thus lose the fear of concluding permanent contracts. Not only that, it did not happen (lPermanent contracts stagnate below 10% of the total) but temporary workers have become even more precarious, judging by data from people who sign more than one contract.
This responds to the fact that after the Great Recession there is a change in the productive model in Spain, in which activity, especially small businesses, is attracted to lower value-added services (such as tourism) that generate more volatile jobs. This trend would explain why the behavior of temporary hiring continues to be worse than that recorded before 2008, despite the restrictions introduced by the 2021 labor reform. And this also contributes to a greater turnover of permanent staff, both ordinary and discontinuous.
In any case, this composition of the economic fabric would be the key macroeconomic factor that explains why the reform has not deployed its full potential during the almost three years of application, as indicated by the analysis of other variables such as the high volume of registrations and disaffiliations to social security.
