European Trade Union Institute, ETUI.

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5 May 2018

Spain: temporary work, skills mismatches and the lack of an active labour market policy

With a very high share of temporary employment and low investment in an active labour market, the country ranks among the poorest performing countries with regard to productivity growth, working conditions and poverty risks, warns new analysis.

Spain has one of the highest shares of temporary employment in the EU, and many temporary contracts are of very short duration. Transition rates from temporary to permanent contracts are very low in comparison to the EU average. The widespread use of temporary contracts is associated with lower productivity growth (including through lower on-the-job training opportunities), poorer working conditions and higher poverty risks. The European Commission warns in the latest European semester documents about low productivity growth due to low innovation capacity and investment in knowledge and skills. Strong labour market segmentation and uneven social policy outcomes risk entrenching high income inequality. Skills mismatches and gaps in educational outcomes also weigh on productivity growth. Tertiary graduates face difficulties in finding adequate jobs, and both over- and under-qualification are widespread.

In its report Getting Skills Right: Spain that was published in April 2018, the OECD confirms this outlook. Adults in Spain have one of the poorest performances on basic numeracy and reading skills compared to all other OECD countries. Even tertiary graduates, who perform higher than the national average, still have the lowest average literacy scores of any of their peers in OECD countries. More could be done to match skill supply to demand. Focusing on publicly-subsidised training for the employed and unemployed in skills and qualifications which are in high demand would help, as well as expanding opportunities for adults to engage in lifelong learning. The OECD recommends in fact a more active labour market policy; despite high and persistent unemployment, Spain spends relatively little on training and job search assistance for the unemployed compared with other OECD countries. In the 2015 Skills Strategy Diagnostic Report, the OECD had already identified 12 skills challenges.

Other labour market publications report difficulties for employers in finding job candidates. This is quite remarkable for a country with an unemployment rate of around 16% (in March 2018). According to the research department of Randstad Spain that analysed why job vacancies are difficult to fill, 55% of companies had difficulties in finding the right candidate. The department revealed in a detailed report that there is a shortage of talent, mainly in jobs that require highly qualified employees (52%) or vocational training (53%). Randstad also reports about the distribution of temporary work. This type of contract is neither homogeneously spread over age groups, nor over branches of activities. In certain activities, there is a high proportion of temporary work (agriculture: 60.72%, hospitality: 38.07%, construction: 40.98%, in 2017 Q4). Other branches are basically characterised by stable employment relations.

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