Labour Market Institutions in Spain

The paper is made up of two sections. In the first one, the legal and institutional bases of the labour market, the labour relations and the employmentpolicy are presented. In the second one, the labourmarket's functioning in theform of negotiations and collective labour contracts is described.In the first section, in presenting the most important legal bases of the labourmarket, the labour relations and the employment policy, the exceptional roleof the constitution is emphasized. The constitution not only declares the rightto work and to a pay sufficient to satisfy one's own and his family's needs, butalso obligates the public authorities to create conditions conducive to economic and social progress and possibly equitable distribution of regional andpersonal incomes within the framework of the economic stabilization policy.The authorities have to conduct a policy aimed at full employment. The constitution attaches great importance to the development of social partnershipboth on the central and regional level and, on the microeconomic level, in therelations between employers and employees. The most important forms ofsuch cooperative relations between the employers and the employees are collective negotiations and the resulting collective contracts that are endowedwith binding power. In the second section of the paper, different kinds of collective negotiationsand contracts, their development, their main objectives and their life periodsare discussed in detail. Themost important areas of negotiation are: the remuneration for work, the working time and the way of its distribution, as well asthe employment contract system. The point of reference for pay agreements inthe majority of collective contracts is the inflation forecasted by the government, supplemented with a guarantee clause allowing for possible underestimation of the inflation.More rarely, the last year's real inflation is adoptedas pay increase basis. In the pay rise negotiations, beside the inflation, the increase in productivity is taken into account, too. In Spain, among the untypical employment contracts, those most frequent areterm contracts. They make one third of all the employment contracts and theirshare is three times as high as in the EU15 countries on average. Whereas theemployment contracts for part-time work are in Spain much less developedthan in the EU15 countries on average. Within the framework of their employment policy, the public authorities tend, among other things, to limit the termemployment in favour of no-term employment and to a broader use ofpart-time employment contracts. The part-time employment facilitates reconciliation of occupation with family duties and, thereby, favours the increase inoccupational activity and employment that, in Spain, stay below the averagelevel for the EU15 countries. In addition, when observing the Spanish labour market, a trend towards shortening the duration of full-time work and lengthening the duration of thepart-time work can be noted.