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In 2012, the government of Mariano Rajoy decided to conduct a thorough reorganisation of the Spanish labour market through a long-awaited reform. This reform favours entrepreneurs and gives them more freedom to manage their staff. Employees themselves do have some reservations about this reform which aims to encourage companies to create new jobs.

Labour Reform 2012: User Manual

These changes made by the Spanish Government consist of 4 main fields of action:

  • Suspension of 1,300 collective agreements for the creation of work contracts.
  • Companies can now change the working conditions of their employees: the company can reduce salaries by a maximum of 10% and can also change their business activity and reorganise working hours between 10% and 70% if necessary.
  • The dismissal procedure has been greatly cut down. Dismissal compensation has gone from 45 days to 33 days per year, for a reduced layoff fee. Layoffs are also being made because companies no longer have to apply for authorisation from administration. Dismissal for misconduct which compares the employee in question with the rest of the staff, now takes into account one’s own faults without any need for comparison.
  • Employing young professionals under 30 in a company with less than 50 employees is rewarded with a bonus from the State. The company will not have to pay any social charges and will receive 3,000 Euros one year in.

Aims for the Labour Reform in Spain

The main objective was in particular to modernise the Spanish labour market but also to prepare for a growing economic crisis that has been suffocating the country since the bubble burst in 2008. With a more flexible and competitive market, the Spanish government hopes to reduce the unemployment rate which reached a record rate of 25% in 2013 and almost 50% amongst those under 25 years old. The positive effects of this reform should be seen in the medium term from 2015/2016.

Advantages for Entrepreneurs

This reform clearly favours entrepreneurs by giving them more freedom to organise their staff. It has allowed many companies to separate themselves from non-productive employees or to adapt their working hours and the role of certain employees to overcome any economic difficulties that they may encounter. Employees under 30 years old are clearly favoured here too. They will now have access to fixed-term contracts and training contracts, leaving precarious, unreliable contracts to which they were accustomed in the past.

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