Labour reforms in Spain, 2012

Much of Spain's economic recovery in 2014-15 is often credited, in part, to the labour reforms carried out in 2012. What were these changes? Did they go far enough? According to the OECD's 2013 assessment, the 2012 reforms had the following impacts:

  • Improved the internal flexibility of firms.
  • Reduced the dismissal costs for permanent employees
  • Contributed to significant wage moderation
  • Increased hiring on permanent contracts
  • Have the potential to increase productivity and competitiveness.

Source: OECD, 2013. See below for a detailed summary of labour reforms.


Did the reforms work? Did they go far enough?

According to a study in 2015 by Garcia and Jansen et al, they did not address key imbalances:

  • The reforms have not been sufficient to address the duality in the Spanish labour market: where highly-protected jobs exist at one end of the spectrum versus both high percentages of fixed-term contracts and high youth unemployment remains at the other.
  • The use of temporary contracts has been directed at areas that are not temporary or seasonal.
  • Despite profound changes in collective bargaining laws, the reforms to collective dismissals have had limited impacts, and have produced procedural errors which required the dismissed workers to be reinstated.
  • Active labour market policies to address the mismatch between the supply and demand for labour, such as retraining are yet to be seen.

Source and credit: Garcia and Jansen,


What were the reforms, in detail?

This table details the labour reforms on one page. Click on the image for a .pdf version.