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Labor Law Change May Offer Relief For Spain's Youth

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Labor Law Change May Offer Relief For Spain's Youth

Europe

Labor Law Change May Offer Relief For Spain's Youth

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STEVE INSKEEP, HOST:

There's also a lot of economic hardship in Spain, where half of all 20-somethings are out of work. That is not just the result of a collapsed housing market and austerity measures, it's partly because of a two-tiered labor system that offers either temp work, or jobs for life.

As Lauren Frayer reports from Madrid, Spain's government is trying to change that.

LAUREN FRAYER, BYLINE: For his age group, Miguel Viada is one of the lucky ones. He's got a temp job, at a tech company's help desk. But three out of his four roommates are unemployed.

MIGUEL VIADA: They are like, all the days, like five hours in the computer, sending curriculums. It's impossible. They find jobs, but for one month or something like that, and in not very good places or situations.

FRAYER: They're the so-called ni - ni generation - Spanish slang for neither in school, nor work. Spain already has Europe's highest unemployment, almost one in four workers. It tops 50 percent for people in their 20s, like Viada and his friends. Part of the reason is Spanish labor law. A third of all workers here are on temporary contracts. That's usually the way young graduates start out. Now, they're supposed to bump up to permanent status, with better pay and benefits, at the three-year mark. But in a recession, when companies can't, or don't way to pay more...

JAVIER DIAZ-GIMENEZ: Well, there you've got it. Almost everybody loses their job at two years and 364 days.

FRAYER: Economist Javier Diaz-Gimenez says it makes sense that Spaniards live with their parents into their 30s. They've got no job security, to make long-term financial plans. On top of that, unemployment checks amount to up to 70 percent of your pay, double what it is in most of America. So there's incentive to go on the dole, Diaz-Gimenez says, especially for young people.

DIAZ-GIMENEZ: You have this very low-paid and bad incentive labor contract that is not really teaching you anything, and then you spend as much as two years getting unemployment compensation. Because after all, you know, why should you not do that? Three years junk job and two years unemployment compensation paid by the taxpayers.

FRAYER: On the other hand, Spanish law requires employers to think very carefully about laying off workers on permanent contracts. Severance pay is typically 45 days' salary for every year on the job. That's three times as much as in Germany. Diaz-Gimenez runs the numbers for someone who's been working for, say, 20 years.

DIAZ-GIMENEZ: So say if I'm making 100,000, I could be liable for as much as 250,000, and that clearly is a lot of money for any employer, especially if it's a small or medium-sized firm.

FRAYER: The business-friendly conservatives in power now want to overhaul Spain's labor system, and say it's long overdue. These contracts go back to the 1960s under Francisco Franco, the military dictator. People didn't have much political freedom, but they had secure jobs in return. Now Prime Minister Mariano Rajoy wants to strip away some job protections that have been in place all these years. And he knows, full well, the trade unions won't like that.

(SOUNDBITE OF VOICES)

FRAYER: Mingling in Brussels last week, Rajoy was caught on an open microphone complaining to the Finnish prime minister, saying he was expecting a strike back home, once Spaniards get word of his labor reforms. In fact, it's already begun.

(SOUNDBITE OF PEOPLE CHANTING)

FRAYER: Furloughed iron workers marched down Madrid's Gran Vía. Teachers have been on intermittent strike for months. Miguel Viada, the young tech worker, lugs groceries home for his out-of-work roommates. He's got a masters degree, and is frustrated he's only got temp work. But in this economy, he doesn't dare say it.

VIADA: It's like, you can't complain, you must be happy about have a job. Maybe it's not a good job, but you must smile and say, hey, I'm a lucky guy.

FRAYER: Cabinet ministers are expected to announce plans for labor reform this week. They may be able to change Miguel's contract, for the better. But it could be more difficult to change his generation's outlook, about Spain's future.

For NPR News, I'm Lauren Frayer in Madrid.

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