Sat. Feb 22nd, 2020

The International Monetary Fund (IMF) estimates that labor reform has improved job creation

The International Monetary Fund (IMF) estimates that the labor reform approved in Spain allowed create jobs to a greater extent than would have been generated if there had been no legislative change. The negative part is that it increased part-time employment, which has raised the rate of poverty at work.

The analysis of the Fund he directs Kristalina Georgieva it has been made public just when the Pedro Sánchez coalition government wants to repeal part of that reform at the behest of the unions that consider it harmful to workers. The most questioned measures of the reform approved in 2012 are the suppression of ultraactivity of agreements or the elimination of prior administrative authorization in the case of employment regulation files (ERE).


The bias is also a consequence of market outsourcing

As stated in the document, after the reform “employment growth it was systematically higher and youth unemployment was lower compared to a possible evolution of employment growth and youth unemployment in the absence of reforms ”. According to the EPA, young people between the ages of 20 and 24 have gone from an unemployment rate of 53% in 2013 to the current 28%. In the rest of the age groups of younger workers, the evolution is similar.

IMF Director Kristalina Georgieva

IMF Director Kristalina Georgieva

The IMF warns in the report that one of the negative consequences is “a reduction in the average hours worked and an increase in involuntary part-time employment”. The agency warns that one of the causes of the increase in this type of work may be a consequence of the “flexibility” that the reform incorporates.

Another factor is the change in the labor market with the reduction of employment in construction – which mostly employs full-time people – and the growth of activity in the services sector where, according to the IMF, 18% of the contracts are part time.

As a result of this greater employment that is not full-time, the international organization warns that it has detected “a deterioration in the rate of poverty at work after the reforms”. The IMF recalls that in most cases the workers who occupy a part-time job do not do so on their own. That means they are workers who end up having low wages because their workday is reduced.

Gini Index

The Fund maintains that inequalities have been reduced

In relation to the Gini index that measures income inequality, the IMF estimates that the labor reform “contributed to a significant reduction in the coefficient.” On the other hand, the agency warns that the effect on the group of workers with lower salaries is not clear.

The employers do defend the maintenance of the labor reform, as well as institutions such as the Bank of Spain.

Is a labor reform necessary?

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