The labor reform seems to have had a surprising side effect: Recorded average contract duration has fallen to an all-time low in 2024according to the latest data collected by the State Public Employment Service (SEPE). It was exactly 45.26 days, 8.1 less than 2021. Although the term ‘surprising’ admits two important nuances. The first, that the data only includes temporary contracts whose expiration date is established at the time of signing.. That is, it does not include the indefinite ones. The second, that in recent years is not by far the biggest decline: since 2006 the indicator has accumulated a fall of 33.9 days, dragged down by a collapse in industry and construction. A mystery that says so much about the evolution of the precariousness of the Spanish economy as well as the effectiveness of the legal changes that sought to eradicate it.
The one that came into force three years ago attacked temporary hiring in several ways, starting with the disappearance of contracts for work and servicewhich until then grouped together the majority of the category of temporary “indeterminate duration”. That is, they are signed without a closed expiration date and, therefore, They also do not count for this statistic. The rule also reinforced causality to justify making a temporary contract and toughened the conditions for extending it, which also affects the registered duration.
Between 2021 and 2024 the number of temporary contracts has fallen 48%, to 8.9 million and the permanent ones have shot up 207%, up to 6.4. But the accumulated of both types has fallen by 20%, which is explained because the proportion of permanent contracts over the total It has gone from 1 to 4 in ten.
How is it justified that fewer temporary contracts are signed, but they last less? It must be taken into account that the duration is calculated based on existing contracts, so the data does not fluctuate just because they increase or decrease, but rather reflects other causes, such as an economic crisis that affects hiring decisions, or a legal change. That is, they reflect the circumstances that lead companies to make longer temporary contracts or notwhich also influences its possible conversion to indefinite.
The reform three years ago sought to ensure that these contracts can only be made when it is fully justified and, furthermore, The expiration date is always specified at the time of signing. The only temporary contracts of ‘indeterminate duration’ are replacement contracts, which totaled 1.1 million. In 2021, counting those lost in works and services, the figure reached 6.7 million and They accounted for 38.7% of the total temporary ones. In 2024 they barely reached 12.3%.
Therefore, it seems clear that statistics are now surfacing very short-term jobs that were previously left ‘masked’ under those of work and service. But also that restrictions on temporary hiring mean that companies that continue to use it do so only for shorter positions than before. In this sense, the decline in the average duration is not necessarily a bad sign because it responds to a ‘recomposition’ of the contracting model. With an important nuance.
Despite the good results of the labor reform, temporary contracts They are still six out of ten. In this sense, the fact that their average duration has decreased does pose a problem for workers. Expressed in a simple image, wage earners trapped in this type of jobs They find that they have 8.1 days of work and salary less than in 2021. An issue that becomes complicated when we take into account that, as we have reported in Economista.es, only 5% end up becoming indefinite and only 13% are extended. That is to say: the remaining 82% expires upon reaching the specified date.
A phenomenon that comes from before
However, if we expand the range of analysis and look at what has happened since the beginning of the historical series, in 2006 we discover that it is a trend that had been creeping in since long before the last labor reform. The accumulated decrease in those 18 years is 33.9 days. In fact, the fall started with the financial crisis, and it was not reversed with the recovery starting in 2013. Quite the opposite.
That of the last exercises is not the biggest setback either. What’s more, if we compare what happened in the first three years of the last labor reform with the first three of its predecessor in 2012 (that is, comparing the situation in 2011 and 2014), we see that a decade ago the decrease in duration was even longer: 9.6 days. With the important difference that it did not occur due to a cut in temporary hiring, but they increased by 15.4%. Furthermore, the doubt remains that if four out of ten were of indefinite duration (due to work and service), the collapse In this case it could have been even higher..
If we had written this article in 2014, we would have had to talk about more temporary and more precarious contracts. Despite the fact that that rule was intended to encourage indefinite hiring by lowering the cost of dismissal and limiting extensions. But her changes in the design of contracts were more modest than those of her successor, who, although she did not reverse the cut in compensation, He did attack the legal framework of temporary employment.
Now, the fact that companies cannot make temporary contracts does not mean that these jobs are not ‘de facto’. Criticism of the latest labor reform has focused above all on the transfer of precariousness from temporary to permanent ones, in especially to discontinuous permanent workers, who chain periods of activity with others of inactivity, for which they neither receive a salary nor are registered with affiliation. Although it is also seen in an unprecedented rise in resignations, dismissals and dismissals for not passing the trial period among ordinary permanent employees. More permanent contracts, but more precarious?
The truth is that, although these are worrying signs and speak volumes about the real quality of employment, the same Social Security data show that the effective duration of employment, that is, the time that elapses between registration and cancellation of affiliation, has increased.
As we already reported in elEconomista.es, the latest Yearbook of Labor Statistics, corresponding to 2023, reveals that employees have ‘gained’ 48 days from the average duration recorded in 2019, going from 189 to 237. This is a volatile variable (for For example, during the pandemic it was greatly distorted by the ‘frozen’ jobs under ERTEs) but the evolution marks a positive impact of the labor reform.
But it also shows that 55.3% of jobs last less than a month. It is a relative improvement from the 60.2% five years earlier, although the high rate explains the apparent contradiction between contract data and affiliation data: the duality of the labor market.
An in-depth analysis of both statistics shows that they both reflect that the gap between precarious and stable jobs has been reduced in the number of jobs affected (there are more permanent and fewer temporary jobs, which takes that the average duration of jobs increases due to a pure composition effect) but not in quality. The permanent ones are somewhat more unstable and the temporary ones continue to shorten their duration.
The difference is that by reducing the weight of those of indeterminate duration due to the disappearance of those of work and servicethe information is more complete than before. And this allows us to advance in the understanding of one of the great paradoxes of the Spanish labor market which means that, despite the labor reform which has reduced temporary employment, we maintain the highest rate of volatility in the EU.
The precariousness of the industry
One of the most used keys to explain this phenomenon is the composition of the productive fabric. Since the beginning of the century, there has been a process in which the industry (which provides more stable jobs, even among temporary ones) has lost weight, first at the hands of construction and, after the crisis, displaced by the service sector, with short-term jobs (especially in hospitality, commerce and education).
However, an analysis of the data on the duration of temporary contracts by sector shows that the reality is somewhat more complex. Thus, between 2006 and 2011, coinciding with the first phase of the financial crisis, there was an unprecedented collapse in the average duration of contracts in industry and construction, In agriculture and services there is a decline, but much softer.
This is not explained by the large destruction of employment in those years (the duration does not vary because fewer contracts are signed) but by the economic situation, which slows down projects and alters hiring decisions. But with the economic recovery and activity, hours do not return to previous levels. In services and agriculture it maintains a similar trend (with the only exception in the pandemic slip in 2020).
Under construction there is a certain comeback, far from previous years marked by the credit boom. Now, many companies were reorienting themselves towards rehabilitation and sustainability projects, irrigated by Next Gen funds. But after the reform, it fell again and it is the sector that does so the most. In fact, it can be intuited that the decline of the last three years is due to this sector. But here it is worth remembering that the reform introduced new indefinite contracts linked to workdesigned ad hoc for the characteristics of the sector, including its own type of termination.
Meanwhile, the industry reduces its hours until it approaches a level very similar to that of services. It has gone from a maximum of 188 hours in 2008 to 47 in 2024, barely a third and which, as we have explained, is not attributable to the changes introduced by the last reform. A surprising collapse in 16 years that illustrates the growing precariousness of this sector, not only in terms of employment, but also in terms of activity. And it shows one of the greatest challenges of modernizing the economy in Spain.
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