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Have the labour reforms reduced the temporary employment rate among young workers?

An analysis of possible short-term effects in Spain and Portugal

Alejandro Godino and Oscar Molina, Sociological Research Centre on Everyday Life and Work (QUIT), Universitat Autònoma de Barcelona (UAB); Fátima Suleman, Instituto Universitário de Lisboa (ISCTE-IUL), Dinâmia’CET

Spain and Portugal have experienced high temporary employment rates in recent decades, a circumstance that takes a long-term toll on people's professional and personal development. In response to this problem, reforms have been implemented with a view to reducing the rate of temporary employment in both countries. The results show that, after they were adopted, a drop occurred in the temporary employment rate among the youth population in both countries (a small drop in the case of Portugal and a much larger one in Spain), apparently without any negative impact on unemployment or labour force participation rates. Although these reforms initially appear to have a positive impact on the youth population, long-term monitoring is indispensable to be able to evaluate their effectiveness over time and to understand whether they have a differential effect on different groups of young people in the labour market.
Key points
  • 1
       The labour market flexibility measures implemented in the 1980s in Spain and Portugal led to a labour market that was highly segmented between permanent and temporary workers. This resulted in greater job uncertainty for certain social groups, especially young adults, affected by high temporary employment rates and also hard hit by unemployment during periods of crisis.
  • 2
       The recent labour reforms sought to tackle these situations of vulnerability in the labour market caused by temporary contracting by means of apparently structural changes in Spain and more limited ones in Portugal.
  • 3
       In comparison with 2019, the reduction in the temporary employment rate among Spanish young adults was over 8% just after the adoption of the reform (2nd quarter 2022) and almost 19% more than a year after its implementation (2nd quarter 2023). This reduction fell short of 1% in Portugal one quarter after the adoption of the reform (2nd quarter 2023).
  • 4
       The figures show that, seemingly, more structural reforms are required with the aim of changing business practices regarding temporary contracting in order to attain substantially beneficial results for the youth population.
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