Background information

The experience of recent months, as a result of the health and economic crisis derived from COVID-19, has shown the importance and effectiveness of resorting to temporary employment regulation files, as a mechanism for internal flexibility of companies for the temporary adjustment of its activity, in order to avoid the job destruction characteristic of previous crises. The result has been very positive in terms of decoupling the evolution of GDP from that of employment, as well as fiscal balances (thanks to the cushioning of automatic stabilizers), in terms of the stability of labor relations, in maintaining the fabric productivity and human capital, as well as lower unemployment rates, unmatched by previous crises.

This measure is part of a tripartite agreement between social partners and the government to reform the labour market.

Content of measure

The new mechanism for economic stabilization and internal flexibility of companies, as an alternative to the destruction of employment and high temporality, allows achieving a double objective: (i) protecting employment against economic crises and market difficulties and (ii) accompany the processes of structural change to avoid a negative macroeconomic impact resulting in the loss of human capital, potential growth, and the well-being of society as a whole. The purpose of the new flexibility and stabilization mechanism –which also has important benefits in Social Security contributions– is to protect employment, prioritize the temporary adjustment of working hours, promote the stability of labor relations, investment and human capital.

This policy measure aims to facilitate the use of temporary employment files, as an alternative and priority formula for job terminations and a new mechanism for flexibility and stabilization of employment to meet the exceptional needs of a macroeconomic or sectoral nature that justify the adoption of temporary adjustment and protection measures, as well as investments of a public nature.

Use of measure

No information available.

Target groups

Workers	Businesses	Citizens
Applies to all workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Trade unions Employers' organisations	No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Agreed (outcome) incl. social partner initiative	Agreed (outcome) incl. social partner initiative
Form	Direct consultation outside a formal body	Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Peak or cross-sectoral level

Involvement

This policy measure is part of a labour market reform resulting from a tripartite agreement between social partners and the government. The social partners involved were the most representative trade unions and employers at national level, i.e., CCOO and UGT on the union side, and CEOE-CEPYME on the employer side.

The government initiated negotiations with social partners outside tripartite bodies in November, in order to reach an agreement by the end of the year. The objective was to agree with them on a new labour market model with the objective of reducing temporary employment, facilitating adjustment of companies and employment protection, and changing collective bargaining rules.

Views and reactions

As actors directly involved in the negotiation and elaboration of the reform, the most representative trade unions and employers were supportive of the agreement and were convinced of its importance to provide a better mechanism to adjust companies' activities to fluctuations in the economic cycle.

Some voices within the employer organisation CEOE were critical, not so much off the new mechanism for internal flexibility, but of other elements included in the law, including the use of temporary contracts.

Sources

• 30 December 2021: Real Decreto-ley 32/2021, de 28 de diciembre, de medidas urgentes para la reforma laboral, la garantía de la estabilidad en el empleo y la transformación del mercado de trabajo (www.boe.es)