A new publication from the OECD highlights that the labour market in Spain showed substantially more resilience during the COVID-19 crisis compared to the global financial crisis. Whereas unemployment in the earlier crisis skyrocketed by 18 percentage points, it only increased modestly by 3 percentage points in response to the COVID-19 shock.
Using cutting-edge research techniques, the OECD finds that the increased and widespread use of a job retention scheme explains much. In the absence of this job support system, unemployment rates would have been at least 4 percentage points higher than actual rates on average during the 18 months since March 2020.
The OECD at the same time points to the role of social partners in triggering and shaping a stronger and better functioning system of job retention support, resulting in a massive take up with, at its peak, one in four employees in short time work.
“It is refreshing to read the OECD supporting a progressive job retention scheme to save jobs and prevent mass unemployment. It is important to encourage governments, employers and unions to work together to save jobs whenever possible and create the conditions to enable workers to move into better jobs when job losses cannot be avoided."
“COVID was clearly a temporary problem where mass layoffs were avoidable. Spain provided a good example of effective Government intervention and social dialogue safeguarding employment. The result was good for business, good for workers and good for the economy” added Veronica Nilsson.
The findings of the OECD on the reform of job retention in Spain during COVID are of major interest, not only for Spain but also for other policy makers and trade unions across the OECD as they show that such schemes can safeguard jobs on a massive scale and shield labour markets from big shocks.
At the same time, it is regrettable that the OECD does not consider the benefits for the wider economy, with less insecure workers maintaining household consumption and thus preventing a more severe downturn. Moreover, some policy recommendations, especially the recommendation to replace current business co-financing of the job retention scheme with future contributions social security contributions (“experience rating”), is questionable and not based on robust analysis.
For more see TUAC paper
Photo Kivanc Ozvardar ILO
