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Instituto Valenciano de Investigaciones Económicas

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Sara de la Rica and José Ignacio García highlight temporality as the primary cause of inequality among young people in employment, which no labor reform has been able to address properly

El primer diálogo del ciclo La [Des] Igualdad de oportunidades Retos señala las mayores dificultades que afrontan los jóvenes y las mujeres en su inserción laboral y posterior carrera profesional

The series of dialogues, “[Un] Equal Opportunities”, organized by Ernest Lluch Foundation and Ivie, along with CaixaBank, began with a first session that addressed the inequalities in the labor market and employment prospects in Spain. Sara de la Rica (Director of the Iseak Foundation and Professor of Economics at the University of the Basque Country) and José Ignacio García (Rector of the International University of Andalusia and Professor of Economic Analysis at the Pablo de Olavide University) participated in the consideration. The two experts agreed that personal circumstances, such as gender, origin or family situation at birth, are the primary variables that determine a person’s employment outlook. Thus, insisting on the need to implement public policies to reduce these initial inequalities.

Sara de la Rica recalled that these personal conditions account for 52% of the current income inequalities in Spain and 25% of the PISA test scores. Furthermore, studies carried out by Iseak Foundation indicate that family circumstances at birth determine 82% of a person’s educational level. He stressed the need to transform education in order to avoid the current socioeconomic level segregation and to provide the basis for achieving equal opportunities in the labor market.

One of the factors the speakers analyzed that explain the inequality of opportunities in the labor market for young people is the level of education achieved. Thus, Sara de la Rica clarified that young people who are trained and aligned with technological developments are the big winners, while those with only basic training are limited. In addition, she emphasized the need to encourage everyone to pursue education beyond compulsory studies.

In José Ignacio García’s opinion, temporary employment is the main challenge, since the objective should not only be to create jobs, but to create quality jobs that are stable with decent salaries. He also acknowledged that Spain has a problem with its productive fabric, based on small firms with little capacity to generate employment and in sectors that are too seasonal, such as tourism or catering. However, he also attributed the current labor instability to the creation of the temporary contract 40 years ago. According to García, excessive rotation, especially of young people, has been addressed in over 10 labor reforms since 1984, but remains unresolved. He also commented that the latest labor reform has not solved this problem either, because discontinuous permanent contracts still have temporality issues. He adds that young people work on average 87 days the first year they join the labor market and 170 the second year, which equals very low wages, as they barely make 4,000 euros the first year, which does not allow them to even consider independence.

Sara de la Rica also agreed with this point and stated that the only thing that has changed is the name of the contract, from temporary to fixed-discontinuous, but in reality, these individuals, particularly young people, remain employed by the same company all year long, although they only work a few days a year.

José Ignacio stated that instead of changing the name of the contract, companies should be given incentives to favor permanent contracts, which implies more flexibility in the event of termination. In addition, he insisted that the fixation must be on increasing the size of companies to make them more competitive. He also commented on the need for businesses to be more involved in training, through DUAL training, not only through vocational training, but also at university level. In his opinion, the excess of overqualified young people is not because of universities training too many students, but to the inability of the productive fabric to create highly qualified jobs. He added that businesses need to realize that the wealth generated by low-skilled jobs is very volatile and that it is better to invest in high-skilled jobs, but this requires the support of the public administration.

Two aspects also highlighted by Sara de la Rica that would help to improve the future of employment among young people were the importance of guiding students in choosing careers with a good future, especially those STEM related, and the need for universities to adapt their programs to labor market requirements.

In addition to the difficulties faced by young people when finding employment, the dialogue acknowledged the gender inequalities that exist in the labor market. Sara de la Rica noted that, although women tend to have higher educational levels, this advantage is not reflected in the labor market. On the contrary, women are more likely to be affected by part-time contracts, which is usually not by choice. She warns that the increase in part-time contracts among women, especially after having their first child, also causes a stagnation in their professional careers that leads to the well-known gender pay gap.

Following this first dialogue, the series continues with four more sessions that will run until October 30 and will address inequality in different socioeconomic areas.

26 September 2024