Prepared by Paolo Mauro.
The share of temporary workers in total employment was not particularly high by international standards in the early 1980s, but it doubled after the 1984 labor market reform promoted the use of temporary contracts in an attempt to curb the rise in unemployment.
Dismissals settled through the “mediation, arbitration, and conciliation” procedure (approximately a third of all dismissals) resulted in average dismissal costs amounting to about 13 months of average pay in 1996 (see Table 6 and Figure 7). Survey evidence shows that dismissal costs often exceed the statutory 42 months of pay for unjustified dismissals, as employers seek to avoid lengthy and costly legal proceedings.
The 1994 reform is described in detail in SM/95/25.
Article 52.c) of the Estatuto de los Trabajadores. The economic causes remain unchanged: “to overcome a negative economic situation” (usually interpreted as loss-making).
The cost of justified dismissals (20 days per year worked, with a maximum of 12 months) also remains unchanged.
The imputed yearly revenue for the purposes of IRPF calculations would ordinarily amount to Ptas 2,000,000 (about US$14,000) for each employee.
For practical purposes the duration of the two contracts is likely to be broadly the same.
Under the old apprenticeship contract, workers above 18 years of age received salaries amounting to at least 70 percent of the minimum interprofessional wage (salario minimo interprofesional—SMI) during the first year of the contract, 80 percent during the second year and 90 percent during the third year. Under the new training contract, workers above 18 must be paid at least the SMI for adults (with some adjustment for the number of hours worked). Workers below 18 years of age will continue to receive salaries of at least 85 percent of the SMI for their age, which is roughly two thirds of that for adults.
At the same time, a recent study (Juan Dolado et al., “Minimum Wages: The European Experience,” Economic Policy Octobzv 1996) finds only very limited evidence that the cut in minimum wages in the Netherlands contributed to an increase in youth employment.
A tripartite commission (including representatives of the government) has been established to analyze the temporary work agencies.
The data refer to the gross flow of contracts registered with the Ministry of Labor.
The data are from the National Statistical Institute’s Survey of Active Population. Permanent employment in the survey data appears to have risen somewhat less than might have been expected on the basis of the data on contracts registered with the Ministry of Labor. It is still too early to determine the reasons for the apparent discrepancy between these two distinct data sources.