Spain’s labour reforms creating 25,000 permanent jobs a month, say OECD

The queues may still be lengthy, but Spain's labour market is benefiting from recent reforms

The Organization for Economic Cooperation and Development (OECD) has hailed Spain’s labour market reforms, claiming that the tough measures introduced this year have helped make companies more competitive and helped create as many as 25,000 permanent new jobs a month.

Despite persistently high unemployment, the OECD’s proclamations are sure to be met warmly in Madrid, which has had to repeatedly stave off attacks of its harsh reforms…

However, a recently released OECD report has praised the measures taken by the Spanish government, calling them a “significant step in the right direction,” and adding: “The Spanish labour market has already shown some signs of increased dynamism and this is likely to bring about faster productivity growth in the medium term.”

The report spared particular praise for the way in which the new reforms have helped break the cycle of temporary contracts, washing away “jobs for life” and ending the practice of nepotism in many industries. “The reforms by the Spanish government have contributed to promote hiring, in particular on permanent contracts,” adding that these new measures were key in the creation of 25,000 new permanent jobs per month.

When introduced by Mariano Rajoy’s government, the reforms were met with criticism from Spain’s trade unions and the opposition party because, by their very nature, they enable companies to fire workers more easily. In any typical job market, this could (rightly) be considered a recipe for widespread discontent.

But Spain is different. For too long, too many workers had coasted along, secure in the knowledge that they were expensive to fire, and their lack of productivity harming the country’s economy. By the same token, it meant businesses were reluctant to offer permanent contracts to new or aspiring employees.

The new rules allow for more flexibility, and appear to be having the desired effect – that of more jobs, more people in gainful, permanent employment, and fewer workers doing the bare minimum required. A better system for all – and the OECD evidently agrees.