Custom Remodeling the Spain Labor Market essay paper samples

There is a major economic crisis that has taken its toll on Spain in the recent past and is getting worse by the day; one of the affected areas by this crisis is the labor market. This has made Spain to suffer job destruction than most developed countries; the unemployment rate is around 20% and rising despite the high education standards and massive young and elite job seekers that flood the market every day. Bentolia 2010 argues that neither the fiscal stimulus packages nor employment creation measures for example; the already approved job creation subsidies will be effective if the main problem that induces such an inefficient performance of the labor market is not solved.

Creating a new productive model that places the Spanish economy on a path of high and sustained growth of per capita income requires a science and technology system that is more favorable to innovation and an education system that produces more highly qualified workers. This in return will reduce the current alarming schooling failure rates. The new strategy will need a set of labor institutions that ease relocation of workers from obsolete to emerging industries; this call for the redesigning of these institutions regardless of the current crisis. Forces such as globalization, technological progress, and population aging have rendered them obsolete.

The following measure should be put in place to improve the labor market:

End labor market duality

This calls for a revision of the current labor contracts with widely different payments; apart from the interim contracts that are meant for placement of workers on temporary leave, all other fixed term contracts should be scrapped. They should be replaced with single permanent labor contracts with severance pay that increases with seniority; this system should be introduced with all the recently hired employees. This would level the grounds for dismissal and maintaining judicial protection for discriminatory dismissals.

Improve protection of the unemployed

Raising protection without discouraging job search is better achieved by raising benefits in the first months of unemployment spells than increasing benefits duration. The ceilings on benefits should also be revised upwards because currently they are relatively low. This makes it hard for the job seekers to meet their daily expenses and also implying a scarcely declining benefits profile which reduces the incentives necessary for job search. The EC, 2010 states that human resource management should be rewarded by reducing social security contributions for firms with low dismissal rates and penalizing those with the high rates.

Modern collective bargaining

The structure of collective bargains still makes it difficult for firms to adjust work conditions to production needs over time; therefore, it hinders productivity growth. Dolado, 2008 explains that a measure to consider would be to allow firm level agreements reached by workers and employers to prevail upon high agreements when hiring. With the prevailing regulations, agreements like those recently reached by certain large firms so as to maintain employment are only under very stringent conditions.

Increase the efficiency of labor market policy

Active labor market policy should be concentrated on low skill workers because they are the ones that suffer the longest unemployment spells; therefore, the long term unemployment is avoided. Davidov, 2011 states that there should be a program that allows licensed labor intermediation companies and private agencies to cooperate with public agencies in their provision and management, thus offering workers a wider choice.

This program would benefit both the job seekers and the employed because it guarantees job security as well as a stable income. The job seekers would have enough to pay for their expenses while looking for a job. This project would in return lead to economic development because of more productive labor.

Most companies are likely to oppose this type of amendments because they are favoring employees; this would mean that the companies and the government would have to spend more on workers and job seekers. The government and employers would be at a disadvantage but in the long run, the country would benefit more through economic growth.