Spain | Labour reform: six months on

Permanent contracts increased by 209% in the first half of 2022 compared to pre-pandemic records, while temporary contracts fell by 37%, bringing the temporary employment ratio to its lowest level since 1985. However, it is still too early to accurately assess the transitory and permanent effects of the labour reform.

Key points

• Key points:
• Contracts for works and services (by legal imperative) and short-term contracts (due to their higher cost) led the reduction in temporary contracts. Among permanent contracts, the increase in the permanent-discontinuous modality stands out (700%), which now accounts for more than a third of permanent contracts.
• The employment stability of new permanent contracts is somewhat lower: job rotation and the incidence of part-time work is increasing.
• LFS data up to 1Q22 show that permanent-discontinuous employees work fewer hours than other workers regardless of the type of working day. The composition effect explains only a portion of this gap.
• The reform increases the stickiness of temporary contracts, which could hinder the transition to employment for groups of workers for whom the fixed-term contract was a stepping stone

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