Every month, whenever the latest unemployment figures are published by the National Employment Institute (INEM) or the Spanish Labour Force Survey (EPA), the unions cry foul, insisting that, while there can be no denying that in recent years there has been a net creation of jobs in Spain, a large proportion of jobs are precarious. Their aim is to rebut the triumphant tone that governments often adopt in presenting the figures.
A comparison between Spain and the EU as a whole yields data that appear to support the union stance: the rate of temporary employment in Spain is 31 percent, compared to an EU average of just 13 percent. That´s a big difference, particularly if we bear in mind that the employment rate in Spain is several points lower than in most other EU member states.
No one is questioning the fact that people prefer stable, permanent employment. But does a high percentage of temporary employment signify a precarious economy, as its critics would have it? This IESE-IRCO study, carried out by IESE Professor José Ramón Pin and Research Assistants Esperanza Suárez and Ángela María Gallifa de Irujo (also manager of the IRCO Research Center), shows that things are not that simple. The authors´ research reveals that low rates of unemployment and a high rate of temporary employment are symptoms of a flexible and dynamic economy, with a highly efficient labour market that channels workers to where they are most needed at any given moment in time, while keeping labour costs in line with job productivity. In this kind of situation there is bound to be a certain proportion of temporary workers, but they will quickly find work. This is what we find in the United States, with unemployment rates of 5 or 6 percent, only very slightly above so-called "frictional unemployment", understood as the level of unemployment due to people switching from one job to another.
Conversely, when the unemployment rate remains high, above 10 percent, a high proportion of temporary employment is a sign of underemployment. In these circumstances, agency work becomes the only alternative for those in search of permanent employment.
Applying their findings to the Spanish economy, the authors argue that if the current rate of job creation continues, the proportion of agency work will decrease, although never below 20-25 percent, mainly due to the tourist industry, Spain´s biggest industry, which typically relies on temporary workers.
The study "La gestión de la temporalidad en el 2003" ("Managing temporary work in 2003") is based on the results of a questionnaire sent to large companies based in Spain. Most respondents were confident that the rate of temporary employment would decrease over the next five years.
They also thought that hiring from temporary agencies (ETTs) would decrease in the future, despite their recognition of the valuable work done by these agencies. The companies surveyed delivered a much more favourable assessment of ETTs than tends to emerge from public opinion. The decline in hiring via ETTs is attributed, on the one hand, to a trend towards more stable employment, and on the other, to the fact that costs have increased since a law was introduced in 1999 imposing tougher requirements and establishing safeguards on hiring via ETTs.
A very significant conclusion is that the respondent companies considered the productivity and motivation of temporary workers to be equal or superior to that of permanent employees. In fact, possibly because temporary workers hope to see themselves promoted to permanent jobs with the company, they tend to be more motivated. However, this effect only lasts for a certain period, which some companies set at no more than six months. When temporary workers see that their contract is never going to be anything but a temporary contract and that there is no chance of their ever obtaining a permanent job with the company, their motivation dwindles dramatically.
While all the companies surveyed were satisfied with the role of the ETTs, hardly any of them used ETTs to hire middle managers or people for public facing jobs. Using agency workers for these jobs could jeopardize a company?s image. Particularly the type of worker supplied by ETTs. In the respondents? opinion, hiring via ETTs is tantamount to telling both the worker and the head of the department to which the temporary worker is assigned quite openly that the relationship is transitory and short-term.