Spain’s labour market reforms on track – OECD

Spain’s recent reforms have helped create jobs and should further boost competitiveness and employment, the Organization for Economic Co-Operation and Development (OECD) said.

However, additional efforts are needed to boost competition in product markets and to improve assistance to job seekers, particularly young people, the Paris-based think tank warned.

The OECD Review of the 2012 Labour Market Reform in Spain also said that, despite the still difficult economic environment, more firms have been hiring workers on permanent contracts since the law was passed.

However, “fighting unemployment proves particularly difficult because world economic growth and trade are below expectations. Job creation and ensuring that those without a job are not left behind should be the top priority of the Government in the coming months,” the report reads.

Presenting the report in Madrid, OECD Director of Employment, Labour and Social Affairs Stefano Scarpetta said: “Spain’s on the right track to gradually reduce unemployment. The reforms are already making an impact. But further efforts to better support job seekers and to provide firms with greater options to adjust in difficult times are still needed.”

The OECD estimates that more than half of the 3.2% decline in labour costs in the business sector between the end of 2011 and the second quarter of 2013 is due to the labour reform package.

The reform has also encouraged firms to hire more workers on permanent contracts, by some 30% on average, although the effect on hiring on temporary contracts appears more limited. About 25,000 additional new permanent contracts are being created each month thanks to the reform, largely among firms with fewer than 100 employees, estimates the OECD.

However, half of all unemployed people have also been out of work for 12 months or more, more than double the level before the crisis.



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