Huge pay-offs and temporary contracts to end
6 April 2006, MADRID — A new law could end large severance pay-offs and encourage industry to offer more permanent contracts.
6 April 2006
MADRID — A new law could end large severance pay-offs and encourage industry to offer more permanent contracts.
Currently, Spanish workers who have long-term contracts are eligible for vast severance pay-offs.
But the government is keen to end this because it believes it makes companies reluctant to offer workers long-term contracts.
Instead, one in three workers have temporary contracts of a year or less, leading to job insecurity.
Spain's low birth rate is thought to be linked to this because women are discouraged from having children until later because of the economic uncertainty caused by short-term contracts.
In comparison, in France only 13 percent of workers have short-term contracts.
The government is also keen to reduce the amount which employers contribute to social security payments for unemployment pay.
At the same time, they want to make it harder for employers to keep workers on short-term contracts without the chance of a fixed work contract.
Spain wants to eventually reduce the rate of temporary unemployment – the highest in the European Union.
Currently Spanish workers get 45 days pay for every year they have worked - one of the highest rates in Europe.
The reforms will cut that rate to 33 days for every temporary contract converted into a permanent one. The law will not be retrospective.
Spain's proposed law is being drawn up with the consent of the unions and employers.
A new deal is expected to be reached by 1 May.
[Copyright EFE with Expatica]
Subject: Spanish news