European funds: Spain promises to reform its labor market by early 2022

Spain will reform its labor market to make it less precarious by early 2022, in exchange for funds from the major European recovery plan, a goal that could create further turmoil within Pedro Sanchez's left-wing coalition.

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"

Our goal is to endow ourselves with a new labor law at the start of 2022 in order to be able to channel growth rich in quality jobs

," Economy Minister Nadia Calviño assured Wednesday at a press conference.

This reform is requested by the European Commission from Spain, in order to benefit from the 140 billion euros allocated to Madrid as part of the mega European recovery plan.

The Spanish labor market is characterized by great precariousness, with around a third of temporary contracts, a record in Europe.

In 2012, the conservative government of Mariano Rajoy reformed labor law to boost employment after the crisis, drastically reducing severance pay and authorizing collective redundancies without economic reasons.

Unemployment at 15.9%

Critics of this reform accuse it of having made the labor market very precarious, in particular by facilitating the use of temporary contracts.

Its partial repeal was part of the program of the coalition currently in power, formed by the socialists of Pedro Sanchez and the radical left of Podemos.

But the Socialists are in favor of a more moderate reform than their allies of Podemos, who would have liked to repeal the law of 2012 completely, which could feed tensions within a coalition shaken by the scathing defeat suffered Tuesday by the left to the regional elections in Madrid.

The reform proposed in Brussels includes in particular "

the simplification of employment contracts

", as well as the perpetuation of a partial unemployment mechanism on the model of that created since the start of the Covid-19 pandemic, said Nadia Calviño.

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The unemployment rate reached 15.9% of the working population in Spain at the end of March, where half a million people lost their jobs in 2020 due to the health crisis.