Reforms relating to the labour market are among the urgent structural changes needed to boost competitiveness and, in consequence, economic growth, the creation of quality employment and social well-being. It is with good reason that these have been identified as essential by European Institutions within the framework of the Recovery Plan for Europe, such that they must be undertaken prior to the end of this year as a prerequisite for the receipt of Next Generation EU funds.

Government ministers are sending mixed messages regarding the meaning of these reforms, in many cases diverging according to the political party to whom they belong. This is leading to a high degree of uncertainty with respect to public opinion and, in particular, within the business world.

The Spanish labour market is inefficient, as demonstrated by high levels of temporary employment and unemployment. This is particularly the case with respect to youth unemployment, at double the rate of neighbouring countries. The duality of the labour market affords considerable protection to those on permanent contracts, whilst leaving temporary employees tremendously vulnerable and always bearing the brunt of any redundancies.

Technological and demographic transformations will throw up new challenges and opportunities, changing the manner in which work is performed and organised and requiring significant efforts in terms of reskilling. In order to offset risks and make the most of opportunities, it is essential to adapt the regulatory framework to new economic and employment realities. This must be achieved through the application of measures that bring together a greater degree of flexibility, enabling businesses to adjust their resources according to market conditions, improved employment mobility and stability enabling workers to remain within the job market.

In this document, Círculo de Empresarios sets out a commitment to the simplification of contract types, together with a reduction in compensation for dismissal, the aim being to bring an end to temporary employment and reduce unemployment. Whilst respecting the acquired rights of workers, the new compensation framework, including the deployment of the “Austrian backpack”, would enable compensation for dismissal to be brought within the levels in nearby countries with more efficient labour markets, lower unemployment and fewer temporary contracts.

In addition, this flexibility must be complemented by evaluating the role of collective bargaining, though maintaining the current predominance of company-level agreements over sector-based agreements.

Lastly, it is essential to engage in collective efforts aimed at training and the improvement of active policies that enable reskilling and the redeployment of job seekers.

The application of a strategy of this type would furnish the labour market with the dynamism that it needs in order to face up to current and future challenges and would speed up the creation of more stable, better quality employment.

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