Jobs markets reforms approved
The Spanish Cabinet has approved a series of jobs market reforms in a bid to ease open the economy. The reforms are designed to make hiring and firing easier whilst giving more support to the 23% of workers currently without a job.
The key parts of the reforms are:
- Redundancy pay on new contracts will fall from 45 days for each year worked to 33 days
- The maximum severance pay will fall from 42 months pay to 24 months
- Companies that are struggling will be able to reduce employees working hours
- Companies with less than 50 employees will receive a €3,000 tax break for taking on an employee under 30 who is seeking their first job
- Temporary workers will be entitled to permanent status after two years rather than the current three years. This will affect around 1/3rd of the Spanish workforce
- Those out of work will be encouraged to do community service.
The reforms are likely to cause the jobless total to go up in the short term as employers use the opportunity to get rid of more expensive employees, but economists say that it will free up the labour market in the medium term.
The measures will come into effect tomorrow.