labour market

   Since the mid-1970s the Spanish labour market has been characterized by high unemployment and a virtually continuous rise in the labour force. Whereas the employed population has changed little overall (except for normal fluctuations associated with boom and recession), remaining around the 12 million mark, the active population (those in work or seeking work) has risen from 12.5 million to 15.5 million. This increase is largely explained by two factors: the baby boom of the 1960s, which brought increased numbers to the labour market in the 1980s, and a sharply increased tendency among women to look for employment. Thus, the female participation rate (workforce as a percentage of the population of working age), which stood at about 23 percent at the beginning of the 1970s, had risen to 36 percent by 1995, the bulk of the increase having taken place in the 1980s. Between 1980 and 1994 the male workforce went up by about 540,000 and the female workforce by about 2,100,000. The Spanish economy has been unable to create sufficient jobs to absorb all the additional job seekers. This is not a wholly new phenomenon, because the very low unemployment during the "miracle" years of the 1960s is in part explained by the substantial number of Spaniards who emigrated at a time when finding a job in the powerful economies of Europe was comparatively easy. When the European economic crisis of the mid-1970s forced many of them out of their jobs, Spain found herself with inbound waves of migrants returning to a country in the throes of the deepest industrial recession in her history. Unemployment was made worse by this return migration, although some migrants had a cushion of accumulated savings or redundancy monies that enabled them to open small businesses. Both agriculture and industry shed large numbers of jobs during the crisis-ridden years of 1975–84 (about 840,000 and one million respectively). In agriculture this was part of a long-term trend; in industry and construction it was the result of poor competitiveness once the energy price increases began to bite. Despite rigid labour laws making dismissal of employees exceedingly difficult, redundancies were inevitable if any Spanish industry was going to survive, something which was recognized by the government in their programme of reconversión industrial: much of the government-subsidized restructuring aid went to meet the costs associated with redundancy and early retirement compensation.

   The unemployment problem caused by agricultural mechanization and industrial restructuring at a time of return migration and increasing job-seekers would have been even worse but for the sustained growth of the services sector of the economy, which continued to create jobs throughout the crisis years with an average yearly growth of 0.5 percent, well short of what was needed to compensate for losses in the other sectors, but clearly indicative of a marked trend in employment patterns. This process of tertiarization is a key characteristic of the contemporary Spanish economy and therefore of the labour market. From employing about 30 percent of the labour force in the 1960s, the services sector has gone on to employ 60 percent in the 1990s, with the largest proportional increase occurring in the 1980s, but even during the years of industrial development in the 1960s it was the tertiary sector that showed the highest increase in employment, a difference that became far more marked in the years after 1979 when industry was subjected to a rapid slimming down process. Later still, during the recovery phase of 1985–90, three times as many jobs were created in services as in industry (972,800 and 325,000 respectively). In effect what has happened is that since 1960 there has been a massive transfer of manpower from agricultural activity to employment in the services via, to some extent, a temporary stopover in the industrial sector during the boom years of 1960–73.

   This shift from agriculture and industry to services has been accompanied by a greatly increased presence of the public sector in the labour market. Many of the new jobs were created in state-run services, so that whilst the private sector of the economy was contracting and shedding jobs, the public sector was expanding and creating them. The trend towards an everincreasing presence of the public sector in the labour market came to an end following the escalating government deficit and the public expenditure crisis of the 1990s, but nevertheless the government's impact on the jobs market has been considerable. First, government spending clearly helped to contain the burgeoning unemployment problem by creating half-a-million jobs in Public Administration, Education, Health, Social Security and Sanitation. Second, whilst jobs were being lost in areas associated with the humbler, less skilled sectors of society (e.g. shop assistants, repairers or transport workers), they have by contrast been created in areas more generally associated with the higher skilled (e.g. teachers, health workers or administrators). Third, and consequentially, the labour market has become much kinder to the better educated and more highly trained and very much harsher to those who are poorly educated or unskilled. In this respect the change has been little short of dramatic: in 1970 the proportion of the employed who had post-compulsory educational qualifications was 6.5 percent for males and 5.9 percent for females; by 1991 the equivalent figures were 48 percent for males and 68.6 percent for females. The employment trend in favour of the more educated is unmistakeable.

   The need to encourage job creation in the private sector has persuaded the government to introduce labour market reforms by dismantling the rigid Francoist labour laws that were thought to inhibit employers from taking on workers. The first package of measures came in 1984, when new labour legislation allowed firms to use part-time and temporary contracts more freely than before, as a result of which one-third of all employees are now on fixed-term contracts. This legislation, however, had no measurable impact on employment, in view of which further liberalizing measures were introduced in 1994 under the slogan of flexibilización. This greater flexibility is meant to allow firms to react more quickly to changes in the economic cycle. Reasons for both individual and collective dismissals are now much more broadly defined than before; severance payments have a maximum of one year's salary, provided the dismissal is for approved reasons, higher levels of compensation applying in cases of unfair dismissal; within certain constraints, an employer can impose geographical and functional redeployment on employees; temporary contracts may be extended beyond the previously permissible limits; part-time contracts no longer have stipulated hours or entitlement to the usual welfare benefits if below 12 hours per week; the qualifying age for apprenticeship contracts is raised from 20 to 25 and there is no compulsory compensation upon dismissal. Trades unions, whose agreement is no longer required on a variety of issues after emendation of the Workers" Statute, denounced these measures as a "hire-and-fire" approach to labour and an attack on the rights of workers, but whatever the appropriateness of this approach to eliminating labour market inefficiencies, the fact remains that labour courts in Spain retain very significant powers and that dismissal costs remain comparatively high. Nor is it entirely clear whether curtailing restrictive union practices and reducing employee protection is a sufficient incentive to employers. Some recognition of this in official circles is indicated by a new emphasis on the importance of adequate training of the workforce to ensure the international competitiveness of Spanish firms.

   Further reading

   - Chislett, W. (1996) Spain 1996. The Central Hispano Handbook, Madrid (chapter 1 gives a clear summary of recent developments).

   - De Miguel, A. (1992) La sociedad española 1992– 93, Madrid: Alianza (chapter 8 is an interesting commentary on occupation based on the results of a survey).

   - Fundación FOESSA (1994) V Informe sociológico sobre la situación social en España, Madrid (a detailed sociological analysis of employment and unemployment).

   - Longhurst, C.A. (1995) "The Spanish Labour Market: Recent Trends and Current Problems", in Leeds Papers on Spain in Europe, Leeds: Trinity and All Saints, pp. 9–37 (surveys broad developments from c. 1970 to 1994).

   C. A. LONGHURST