The latest official labor market data measured according to different indicators indicate that although job creation was maintained in the last quarter of 2023, employment advanced at a slower pace and grew in this last phase of the year mainly due to the pull of the public sector and the self-employed, as warned this Thursday by the
quarterly Labor Market Observatory
prepared by BBVA Research, Fedea and Sagardoy Abogados.
This quarterly increase ranged between the 0.1% increase in jobs in seasonally adjusted terms and the 0.8% increase in employment, according to the National Accounts in both cases.
In any case, job creation was lower in the fourth quarter of 2023 than in the third and “only the growth of affiliations gained traction, something that continued at the start of 2024,” states the document presented this Thursday in Seville. .
But beyond the fact that some of these figures reflect certain symptoms of slowdown, the authors of this analysis warn of another circumstance that is occurring in the labor market: the loss of steam of the labor reform to continue reducing temporary employment throughout 2023 The official figures also reflect this, since when this reform came into force the rate of temporary contracts was 26% (one in four employees was temporary) and by the end of 2022 that rate had been cut to 17.9%.
Only a year later the cut was just over one point, to the current 16.5%.
“The effects of the 2021 labor reform on the temporary employment rate were concentrated in its first year of validity (2022), while in 2023 the percentage of employees with a temporary contract barely changed throughout the year,” indicate the authors of this study, which attributes this loss of impact—which has led to keeping the temporary employment rate almost unchanged—to “the drop in conversions from temporary to permanent, among other factors,” this analysis provides.
In fact, during the first months of application of the labor reform, 200,000 contracts became permanent in one month, but in 2023 this change in contractual modality was used even less than before the approval of the reform (less than 50,000 per month). month).
This has meant that the percentage of permanent contracts converted out of the total number of permanent contracts has gone from around 37% in 2022 to around 33%.
The Government and the unions, however, have repeatedly expressed satisfaction with the impact that has already occurred in the reduction of temporary employment and highlight that the labor reform would have already changed the composition of employment in Spain, since around 42 % of new contracts signed each month are indefinite, compared to 9% prior to the reform.
2.2 million discontinued permanent employees in 2022
The economists who prepare this quarterly document have made, in parallel, a first calculation of the use of discontinuous fixed contracts that also promoted the labor reform.
This estimate is produced in light of the continued controversy over the statistics of these permanent workers, but with intermittent periods of activity, because the measurements only show the employees with this contract who are active and registered with Social Security at any given time.
However, it leaves out all those who have this employment relationship, but are in periods of inactivity.
Thus, daily membership indicates an average of members with discontinuous permanent contracts in 2022 of 936,000.
However, the technicians of this observatory have used the Continuous Sample of Working Lives of 2022 - which allows a cross between contribution accounts and workers with a discontinuous fixed contract - to determine that in said year 2.2 million people would have been registered. affiliations of this type, and 75% of them would have started in that same year.
All this indicates that the difference between both figures would place at 1.2 million permanent discontinuous workers who were either inactive or whose contracts fell that year.
Furthermore, continuing with this type of discontinuous contracts, which according to Social Security represent only 5% of the total number of affiliates (although they only include those who are active), this report observes that temporary employment companies concentrated around 75% of this type of employment relationship in 2023 through provision contracts.
While discontinuous permanent contracts represented 42% of all contracts managed by these companies.
Negative effects of reducing working hours
In this scenario, this study updates its analysis on the possible impact of the reduction of the working day on the economy, also pointing out that, with figures from the Active Population Survey (EPA), the reduction of the maximum legal working day could affect to 8 million employees (53%) and will also increase labor costs.
These data also suggest that the excess hours worked, understood as the difference between the effective working day and the new limit proposed by the Government (37.5 hours per week), would reach 28.9 million hours per week in the last year, which represents 5.5% of the total effective hours worked.
For this reason, these economists once again insist that, without compensatory measures to alleviate the estimated increase in labor costs (1.5% of GDP), the reduction in working time would subtract around seven tenths from the average annual growth of the economy over the next two years and would cut employment by another eight tenths.
“Before its approval, it would be necessary to carry out a detailed evaluation of the potential effects of the proposal and involve the social partners in the design and future execution,” they conclude.
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