New legislation came into force on 6 March as a result of the need for urgent action to address Spain’s worsening economic situation. Spain currently has the highest unemployment figures in the European Union: unemployment levels rose to 17.36% in the first quarter of 2009. Youth unemployment is a particular problem, with almost one in three of all people aged 15 to 24 affected, by far the highest rate of any Member State. According to the IMF, the Spanish economy will not commence recovery until 2010 with a predicted 3% decline in 2009.
Under the new rules the Government will allow employers to make reduced social security contributions if they make temporary lay offs rather than full scale redundancies. There will also be greater protection for older employees who face losing their jobs and incentives for employers which hire workers on a part-time basis.
In order to encourage employers to recruit long-term unemployed people the Government will pay up to 100% of their social security contributions for up to 3 years if they take on individuals who have been out of work beyond a certain period of time.
The Government has also extended support for the unemployed by abolishing the current one-month waiting period for claiming unemployment benefits.
The new measures will stay in place until the end of the year at least, but may be extended depending on how the Spanish labour market evolves during 2009. The Government has said it will consult with employer and union representatives before taking any further steps.