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[Excerpt] The main form of flexible employment in Spain is temporary contracts. In 1984, when a legal change was introduced to allow their use (in particular, the so-called temporary contract for employment promotion, TCEP) for any type of job, including the performance of permanent tasks, the ‘causality principle’ was broken (this legal principle states that the firm can only hire workers using open-ended contracts for permanent tasks and should use fixed-term contracts for temporary needs). This break was considered as transitory and exclusively justified by the poor economic outcomes of the Spanish labour market at that historical moment. However, it remained until 1994. Although the causality principle was formally restated, firms had learnt to use temporary contracts as an easy and swift way to adapt to business cycle changes and preferred to keep on using other forms of temporary contracts (as the per-task or the eventual contracts) when the TCEP was abolished, circumventing legal regulation modifications. The model of ‘flexibility at the margin’ hinged on a dual economic structure between jobs prone to stability and jobs prone to instability. The introduction and wide use of temporary contracts probably helped reinforce such structure, creating incentives for the segmentation of jobs, especially in large firms. Therefore, employers intensified the adaptation of their whole production process to the existence of a group of workers in low-paid, high-rotation jobs, hired through temporary contracts, while using open-ended contracts for high-paid, low-rotation jobs.


Suggested Citation
Garcia-Serrano, C. & Malo, M. A. (2013). Beyond the contract type segmentation in Spain (Employment Working Paper No. 143). Geneva: International Labor Organization.