Fedea confirms an increase in the "mortality" of permanent contracts after the labor reform

MADRID, 18 Dic.

Fedea confirms an increase in the "mortality" of permanent contracts after the labor reform


The labor reform has driven up the conversion of temporary workers into permanent ones, both in the ordinary permanent and in the permanent-discontinuous contracts, but it has also increased the "mortality" of ordinary indefinite contracts, so that, although more contracts are made In this modality, its duration is shorter, according to a Fedea study released this Monday.

The report carries out a preliminary evaluation of the 2021 labor reform using a database that covers all daily records of creation and destruction of Social Security affiliates.

According to Fedea's conclusions, although the labor reform has proven to be "very effective" in reducing the rate of "contractual" temporary employment, it has not been so effective in mitigating job insecurity or instability or in reducing the "empirical" temporality rate.

Fedea points out that the strategy followed by the Spanish reform has consisted of "drastically" restricting the use of fixed-term or temporary contracts "without any variation in the flexibility of ordinary indefinite contracts."

"However, to avoid a decrease in the overall flexibility of the system, the reform has encouraged the use of other variants of indefinite contracts that offer less stability, such as the fixed-discontinuous contract. These contracts, despite being labeled as indefinite, do not offer the same level of job security to workers as traditional indefinite contracts," warns Fedea.

The report shows, on the one hand, that the conversion of temporary workers into permanent ones has increased, but, on the other hand, there is a reduction in the duration of ordinary indefinite contracts.

To evaluate the impact of the labor reform, and its effectiveness in reducing the temporary employment rate, the Fedea study analyzes the patterns in the calendar of daily flows of job creation and destruction.

This is because the Spanish labor market has "very marked" calendar patterns: hire on Monday to fire on Friday, hire only for the weekend and hire on the first day of the month to fire on the last day of the month.

Using a time series model in which patterns of job creation and destruction are compared before and after the reform, Fedea does not find statistically large differences between them, except for a decrease in job destruction at the end of the month, which it has been reduced.

According to Fedea, the new labor framework has generated a new distribution of employment contracts that reduces the temporary employment rate to the European average, "but replicates almost exactly the previous situation in terms of job stability for workers," since the daily patterns of creation and destruction of Social Security affiliates.

"That is, in aggregate terms, the labor market does not show the changes that a priori would be expected in the duration of employment as a result of the decrease in temporary employment," warns Fedea.

The work also highlights that the temporary employment rate, which was the main indicator to measure job insecurity in countries with a dual labor market like the Spanish one, "is surely not the best tool for these purposes."

"Certainly, we must look for other ways to measure precariousness that are not based only on the structure by type of contract, but also take into account other variables and in particular the real duration of the contracts," defends Fedea.