Spain | Reducing the workday through agreements, investment, and productivity gains

Summary

The parliamentary process should amend the proposal so that the reduction of the workday happens gradually, with increases in productivity and through collective bargaining, minimizing distortions and avoiding additional inefficiencies in the labor market.

Key points

• Key points:
• From the end of 2019 to the fourth quarter of 2024, GDP per employed person in Spain grew by barely two-tenths of a percentage point in cumulative terms. Investment has been the slowest-recovering component of aggregate demand.
• Per employed person, it is still 4.6 percentage points below its level five years ago. According to the Labor Force Survey, employment has increased by 1.9 million people, but unemployment has only dropped by about 600,000.
• The unemployment rate still stands at 10.6%, double that of the EU. Despite growth, Spain continues to face the structural challenge of improving productivity and simultaneously reducing unemployment.
• The draft bill to reduce the maximum legal workweek from 40 to 37.5 hours without lowering wages has sparked debate over its impact on employment and economic growth.
• Working less without losing income is an attractive idea, but its unilateral application without consensus among social agents generates uncertainty and considerable risks.

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