On 27 October 2011, the Rafael del Pino Foundation hosted, as part of its Master Lecture programme, the conference "The future of employment in Europe", given by the 2010 Nobel Prize winner in Economics, Christopher A. Pissarides.
According to Professor Pissarides, "One of the factors that explains the difference in the speed of job destruction and job creation in Spain compared to Europe is the duality of its labour market, with permanent and temporary contracts. The temporary contract was designed to allow companies to quickly adjust their production in the event of a rise in demand - in the initial moments of the expansionary cycle. When the time came to convert it into a permanent contract, assisted by the law and business logic, companies opted to return to a temporary contract, with a new employee to improve their profits. Thus, employment volatility in Spain has been higher than in the rest of the European Union. But there is another factor that has contributed to this volatility: the high dependence of the Spanish economy on the more cyclical sectors, unlike other economies on the continent. These sectors are the ones that, in turn, have the highest number of temporary contracts [...]. I have no doubt that, for a government, the right approach is to abolish the fixed-temporary duality. There should be a single type of employment contract, perhaps with not too high a severance payment or with a capitalisation model that allows companies and workers to know, at any given moment, the costs of dismissal".
Regarding the situation of the Spanish economy, Christopher Pissarides argued that some of the major reforms needed to relaunch job creation have already been put in place, especially in the last year: "They are going in the right direction, although additional measures are needed. But we are not going to see immediate results in employment. We may see a slowdown in the deterioration of unemployment figures, or even some improvement in this regard, but to see a major impact on job creation we have to wait for economic recovery, which will not come hand in hand with labour market reforms. The recovery needs first to rebuild confidence in the banking system and in the European economy, which are so important for Spain. Once that confidence has been restored, recovery will come and job creation will return within a new labour framework, especially if the uniformity of contract types has been deepened. If the social partners have confidence in this new framework, when the next economic downturn comes - which will undoubtedly come sooner or later - the situation will be very different and job destruction will be much less.
