Spain’s Ministry of Labour is set to subsidise the permanent hiring of unskilled and unqualified young people with a bonus of €275 per month for up to three years.

The new measure, approved on January 10th, will come into effect by September 2023 and builds on Spain’s landmark labour reform passed back in early 2022. It includes several new bonuses and subsidies created to incentivise the hiring and stable employment of vulnerable groups such as the long-term unemployed, young people, women and people with disabilities. 

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At a press conference following the Council of Ministers meeting, the Second Vice-President and Minister of Employment, Yolanda Díaz, emphasised that the measures only provide incentives for permanent job contracts, a major thrust of the recent labour reform that attempts to shift the Spanish employment market away from an insecure model based on temporary contracts. 

The wide-ranging reforms were introduced to rectify the prevalence of temporary jobs in the Spanish labour market and avoid the more exploitative elements of the practice.

Before the labour reform came into force in 2022, fixed-term contracts represented the vast majority of those signed month on month in Spain, many of which were lined up one after another and some contratos temporales could last just hours.

In fact, in 2021 Spain had the highest number of temporary contracts anywhere in Europe. Fortunately, however, the reforms seem to be having the intended consequences: around a third of employees hired in the first four months of 2022 were been given permanent contracts, and by April 48 percent of new contracts signed were permanent. 

The measures, Díaz said, are geared towards promoting employment stability and constructed in a way that temporary hiring will no longer be “rewarded.”

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Along with the government-backed bonus for hiring young unskilled workers, two other incentives will be introduced. One will be €138 per month contribution (also for three years or for the duration of the contract) to support the hiring of people with disabilities and people undertaking internship training within companies.

Additionally, there will be other incentives (€55 a month, as per reports in the Spanish press) for companies that convert temporary contracts into fixed contracts within Spain’s agricultural system.

For companies receiving these recruitment incentives, they must agree to a continuous employment period of three years. The bonus currently provided for the indefinite hiring of people in a situation of ‘social exclusion’ has also been raised from €55 to €128 per month, putting it on par with the pre-existing bonus incentive established for the indefinite hiring of other vulnerable groups. 

Spain’s labour reforms haven’t completely outlawed temporary contracts, however. Temporary workers may still be hired to fill a position, but for a maximum of 90 days a year and not consecutively, as is often the case for large employers trying to save on costs and who effectively employ temporary workers full-time but don’t recognise their pay or protection as such.

Likewise, in the last quarter of each year, companies must give workers some kind of forecast of what type and how much work they will need for the coming year. 

Recovery plan

The introduction of these new hiring incentives rules forms part of Spain’s so-called ‘Recovery, Transformation and Resilience Plan’, which is backed financially by Brussels to the tune of €69.5 billion, of which it is thought ten out of a total of eleven reforms promised to Brussels have been satisfied. 

Hiring incentive bonuses make up around a quarter of the total public spending for active labour market policies in Spain. 

The new measures, approved on Tuesday, also state that companies that transfer their industrial, productive or business activity outside the European Union or the European Economic Area (EEA) must return all bonuses to Spain’s Social Security system from which they have benefited during the four years immediately prior to said relocation, with a surcharge and the corresponding interest.

Likewise, the companies will have to return any subsidies obtained via recruitment and employment incentives.