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Spain to subsidise the hiring of young unskilled workers

In a bid to bolster its recent labour reforms and stabilise the job market, the Spanish government is set to subsidise the hiring of young unskilled workers.

Spain to subsidise the hiring of young unskilled workers
Photo: Josep LAGO/AFP

Spain’s Ministry of Labour is set to subsidise the permanent hiring of unskilled and unqualified young people with a bonus of €275 per month for up to three years.

The new measure, approved on January 10th, will come into effect by September 2023 and builds on Spain’s landmark labour reform passed back in early 2022. It includes several new bonuses and subsidies created to incentivise the hiring and stable employment of vulnerable groups such as the long-term unemployed, young people, women and people with disabilities. 

At a press conference following the Council of Ministers meeting, the Second Vice-President and Minister of Employment, Yolanda Díaz, emphasised that the measures only provide incentives for permanent job contracts, a major thrust of the recent labour reform that attempts to shift the Spanish employment market away from an insecure model based on temporary contracts. 

The wide-ranging reforms were introduced to rectify the prevalence of temporary jobs in the Spanish labour market and avoid the more exploitative elements of the practice.

Before the labour reform came into force in 2022, fixed-term contracts represented the vast majority of those signed month on month in Spain, many of which were lined up one after another and some contratos temporales could last just hours.

In fact, in 2021 Spain had the highest number of temporary contracts anywhere in Europe. Fortunately, however, the reforms seem to be having the intended consequences: around a third of employees hired in the first four months of 2022 were been given permanent contracts, and by April 48 percent of new contracts signed were permanent. 

The measures, Díaz said, are geared towards promoting employment stability and constructed in a way that temporary hiring will no longer be “rewarded.”

READ ALSO: UPDATED: Spain approves new €600 per month unemployment benefit for artists

Along with the government-backed bonus for hiring young unskilled workers, two other incentives will be introduced. One will be €138 per month contribution (also for three years or for the duration of the contract) to support the hiring of people with disabilities and people undertaking internship training within companies.

Additionally, there will be other incentives (€55 a month, as per reports in the Spanish press) for companies that convert temporary contracts into fixed contracts within Spain’s agricultural system.

For companies receiving these recruitment incentives, they must agree to a continuous employment period of three years. The bonus currently provided for the indefinite hiring of people in a situation of ‘social exclusion’ has also been raised from €55 to €128 per month, putting it on par with the pre-existing bonus incentive established for the indefinite hiring of other vulnerable groups. 

Spain’s labour reforms haven’t completely outlawed temporary contracts, however. Temporary workers may still be hired to fill a position, but for a maximum of 90 days a year and not consecutively, as is often the case for large employers trying to save on costs and who effectively employ temporary workers full-time but don’t recognise their pay or protection as such.

Likewise, in the last quarter of each year, companies must give workers some kind of forecast of what type and how much work they will need for the coming year. 

Recovery plan

The introduction of these new hiring incentives rules forms part of Spain’s so-called ‘Recovery, Transformation and Resilience Plan’, which is backed financially by Brussels to the tune of €69.5 billion, of which it is thought ten out of a total of eleven reforms promised to Brussels have been satisfied. 

Hiring incentive bonuses make up around a quarter of the total public spending for active labour market policies in Spain. 

The new measures, approved on Tuesday, also state that companies that transfer their industrial, productive or business activity outside the European Union or the European Economic Area (EEA) must return all bonuses to Spain’s Social Security system from which they have benefited during the four years immediately prior to said relocation, with a surcharge and the corresponding interest.

Likewise, the companies will have to return any subsidies obtained via recruitment and employment incentives.

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The help that self-employed in Spain can apply for in 2023

Anyone who is self-employed in Spain knows it's tough. Fortunately, there are several grants and benefits available to autónomos and small businesses this year to help you out.

The help that self-employed in Spain can apply for in 2023

There are 3,329,863 autónomos or self-employed people in Spain, but according to the Asociación de Trabajadores Autónomos, Spain’s self-employed union, more than 2 million self-employed workers (which is 63 percent of them) have an income that is below Spain’s Interprofessional Minimum Wage (SMI).

READ ALSO: Spain to raise minimum wage by 8 percent

With self-employed workers earning so little and having to pay very high monthly social security payments, which go down €200 a month for lower earners and progressively higher – up to €590 a month for higher earners, many may be forced to look for support where they can. 

What benefits and help are available?

Spain offers a whole host of benefits and help for self-employed people, including the following, which are all available this year.

Starting a new company

Grants of up €10,000 are available to people to help them launch a new business or company. The exact amount varies, and they are aimed at helping unemployed young people aged 30 years or younger, unemployed women, unemployed people with disabilities, and unemployed women with disabilities.

In the case of victims of gender violence, grants can be boosted by 10 percent.

Investment subsidies

There is also aid to help you finance investments. The subsidies work out equivalent to a 4 percent reduction on the interest rate set by the body or business that grants the loan, with the subsidy limit being a maximum of €10,000.

Training

If a self-employed person wishes to undertake some extra training to improve their business or career prospects, they can apply for aid that covers up to 75 percent of the cost up to a maximum of €3,000.

READ ALSO – REVEALED: Everything you need to know about applying for Spain’s digital nomad visa

Digitalisation 

The Spanish government also offers a so-called ‘Digital Kit’, which can be accessed through grants of up to €2,000 to help ‘digitalise’ a business to make it more competitive. These grants are intended for things such as creating a website or e-commerce platform, managing social networks, installing cybersecurity or upgrading systems.

The ‘zero quota’

As many of you probably already know, in Spain self-employed people not only pay quarterly income tax (IRPF in Spain) but must also pay a monthly social security payment. You can read all about that and upcoming changes to the system here, but note that some regions offer to waive this fee in order to promote entrepreneurism.

READ ALSO: New self-employed workers in Madrid to pay no social security tax

Madrid, Andalusia and Murcia all do, and the Balearic Islands will do it for self-employed people under 35 and for women entrepreneurs. These grants effectively mean the region picks up the tab for your monthly fee. It is available for one year and extendable by another 12 months if the recipient’s net income is lower than the SMI.

Minimum Vital Income

Since January, the number of self-employed people who can access the Minimum Vital Income has also increased. This benefit is compatible with income from self-employment and has also been increased. If you qualify, you could get an extra €565.37 per month for a single person without kids and more if you have children. You can find out more about it here

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