Spain hits record number of dismissals in the first four months
Spain recorded 303,998 social security deregistrations due to dismissal between January and April 2023, up 48% year on year and the highest figure in the series, according to data.
English · Original discussion in Spanish · Published
Spain hits record number of dismissals in the first four months
Between January and April 2023, 303,998 social security deregistrations due to dismissal were recorded, 48% more than the previous year and the highest figure in a historical series dating back to 2013. The figure is 15.6% above the pandemic peak and calls into question the record of a Government that boasts of containing job losses through ERTEs (Spain's temporary layoff scheme) and the controversial "ban" on dismissals. The labour reform, which sent the number of permanent contracts soaring, has had a collateral effect that some analysts point out: dismissals of these workers are growing by 78.6% while registrations are growing by only 17%.
The record nobody expected in the first four months
The historical series is stubborn. The 303,998 dismissals in the first four months of 2023 not only beat the 2020 peak (256,000 deregistrations in the same period), but do so with the labour market, in theory, working. The key lies in the composition: permanent contracts have gone from accounting for 76% to 92% of total terminations. More permanent contracts, yes, but also more dismissals of permanent staff.
In 2020, the Ministry of Labour introduced the idea that the grounds allowing access to an ERTE "may not be understood as justifying the termination of the contract." Yolanda Díaz dubbed it the "ban on dismissal." The Supreme Court had to clarify that, absent an express nullity ruling, such terminations could go ahead even if unfair. The legal uncertainty was enormous. Even so, the measure was extended in the decrees for the Ukraine crisis, in force until 30 June.
Why are dismissals soaring if there are more permanent contracts?
Because permanent employment is no longer what it used to be, according to researchers from Fedea, BBVA Research and the Banco de España itself, who point to a precarisation of permanent jobs under the new law, with a rise in dismissals during the probation period that works as an express dismissal without compensation. The most optimistic calculation holds that the increase in terminations is purely statistical: there are more permanent workers, so there are more dismissals of permanent workers. The pessimistic scenario starts from the fact that the rate of destruction of permanent jobs (78%) triples that of creation (17%), and arithmetic does not explain that.
ERTEs, meanwhile, have been reduced to a bare minimum: as of 31 May only 11,716 workers remained on an ERTE. The RED Mechanism, the reform's sectoral jewel, has only been activated for travel agencies. The free-for-all of temporary suspensions that once covered more than three million workers is now a memory.
The make-up of public employment and hours worked
There is an uncomfortable consensus in the analysis: the increase in the number of people in work in absolute terms trinc the trend that began after 2012, the peak of the housing crisis effect. No credit to the current Government or previous ones, just pure cycle dynamics, some analysts argue. The labour force is at its highs without exceeding them, which means it is struggling to grow despite the population increase since 2007.
The other trick is public employment, according to Government critics: in recent years hundreds of thousands of civil servant and adviser positions have been added that embellish the statistics. Hours worked, the parameter that best measures the real health of the labour market (excluding the shadow economy), remain below 2019 levels, according to these same critics. Paper can hold anything; the payslip cannot.
Precarity returns with wages from another era
There are stories that repeat themselves across productive sectors: companies dismissing long-serving workers to hire people on poverty wages. There is talk of offers reminiscent of the 1992 crisis, filled by desperate Spaniards or by migrant workers whose partner tops up with the IMV (Spain's minimum living income). The labour reform has increased permanent hiring, but real wages are falling and fixed-discontinuous contracts are swelling the inactivity lists.
The Government boasts of job creation while temporary employment disguises itself as discontinuous permanence. Analysts call it precarisation; on the street it is called something else. And the figure of 300,000 dismissals, with the ban on dismissal still in force until 30 June, is the ending nobody wanted to write.
The question is no longer whether the labour market can hold up, but how long the official narrative can sustain the next record figure.
Between January and April 2023, 303,998 social security deregistrations due to dismissal were recorded, 48% more than the previous year and the highest figure in a historical series dating back to 2013. The figure is 15.6% above the pandemic peak and calls into question the record of a Government that boasts of containing job losses through ERTEs (Spain's temporary layoff scheme) and the controversial "ban" on dismissals. The labour reform, which sent the number of permanent contracts soaring, has had a collateral effect that some analysts point out: dismissals of these workers are growing by 78.6% while registrations are growing by only 17%.
The record nobody expected in the first four months
The historical series is stubborn. The 303,998 dismissals in the first four months of 2023 not only beat the 2020 peak (256,000 deregistrations in the same period), but do so with the labour market, in theory, working. The key lies in the composition: permanent contracts have gone from accounting for 76% to 92% of total terminations. More permanent contracts, yes, but also more dismissals of permanent staff.
In 2020, the Ministry of Labour introduced the idea that the grounds allowing access to an ERTE "may not be understood as justifying the termination of the contract." Yolanda Díaz dubbed it the "ban on dismissal." The Supreme Court had to clarify that, absent an express nullity ruling, such terminations could go ahead even if unfair. The legal uncertainty was enormous. Even so, the measure was extended in the decrees for the Ukraine crisis, in force until 30 June.
Why are dismissals soaring if there are more permanent contracts?
Because permanent employment is no longer what it used to be, according to researchers from Fedea, BBVA Research and the Banco de España itself, who point to a precarisation of permanent jobs under the new law, with a rise in dismissals during the probation period that works as an express dismissal without compensation. The most optimistic calculation holds that the increase in terminations is purely statistical: there are more permanent workers, so there are more dismissals of permanent workers. The pessimistic scenario starts from the fact that the rate of destruction of permanent jobs (78%) triples that of creation (17%), and arithmetic does not explain that.
ERTEs, meanwhile, have been reduced to a bare minimum: as of 31 May only 11,716 workers remained on an ERTE. The RED Mechanism, the reform's sectoral jewel, has only been activated for travel agencies. The free-for-all of temporary suspensions that once covered more than three million workers is now a memory.
The make-up of public employment and hours worked
There is an uncomfortable consensus in the analysis: the increase in the number of people in work in absolute terms trinc the trend that began after 2012, the peak of the housing crisis effect. No credit to the current Government or previous ones, just pure cycle dynamics, some analysts argue. The labour force is at its highs without exceeding them, which means it is struggling to grow despite the population increase since 2007.
The other trick is public employment, according to Government critics: in recent years hundreds of thousands of civil servant and adviser positions have been added that embellish the statistics. Hours worked, the parameter that best measures the real health of the labour market (excluding the shadow economy), remain below 2019 levels, according to these same critics. Paper can hold anything; the payslip cannot.
Precarity returns with wages from another era
There are stories that repeat themselves across productive sectors: companies dismissing long-serving workers to hire people on poverty wages. There is talk of offers reminiscent of the 1992 crisis, filled by desperate Spaniards or by migrant workers whose partner tops up with the IMV (Spain's minimum living income). The labour reform has increased permanent hiring, but real wages are falling and fixed-discontinuous contracts are swelling the inactivity lists.
The Government boasts of job creation while temporary employment disguises itself as discontinuous permanence. Analysts call it precarisation; on the street it is called something else. And the figure of 300,000 dismissals, with the ban on dismissal still in force until 30 June, is the ending nobody wanted to write.
The question is no longer whether the labour market can hold up, but how long the official narrative can sustain the next record figure.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (71 replies).
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