## The Impact of the 2012 Labor Market Reforms on Absolute and Relative Measures of Living Standards (Content unit: 1espea2020002)

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---

### Effects of the 2012 labor market reforms on macro and distributional outcomes
- The 2012 reforms "catalyzed the recovery," reversing some negative socioeconomic effects of the crisis.
- Growth in GDP per capita after the reforms was largely driven by greater labor utilization; contribution from labor productivity growth was marginal.
- The unemployment rate fell "by more than 13 percentage points from its post-crisis peak."
- Staff analysis finds a "lower path for the post-reform Gini coefficient compared to a possible evolution ... in the absence of the reforms."
- Trade-offs and adverse outcomes associated with the reforms:
  - Reduced average hours worked.
  - Contributed to more in-work poverty.
  - No systematic impact on the risk-of-poverty of the overall population (per staff analysis).
- Possible mechanisms for reduced hours and more in-work poverty:
  - Reduced duration of temporary contracts in recent years.
  - Greater flexibility of part-time contracts and allowance for overtime for part-time workers introduced in 2012.
  - Structural shift toward the service sector with higher demand for part-time employment.
- Policy implications highlighted:
  - Review elements of the 2012 reform package (part-time flexibility, overtime rules, short temporary-contract prevalence) to address possibly unintentional consequences.
  - Consider an Earned Income Tax Credit (EITC) program as a complement to the Minimum Income Scheme; EITC programs "are typically more efficient" for targeting low-income workers and stimulating labor force participation than relying predominantly on minimum wage increases.

### Long-term structural concerns
- "Declining labor shares contributed to more unequal income distributions": in 2018 the labor share in Spain was "more than 5 percentage points below its 1995 level."
- More than half of jobs in Spain are at "high risk of automation or risk of significant change (OECD, 2018)."
- Lower labor shares are associated with higher income inequality because capital ownership is concentrated among wealthier households and low-skilled workers bore the brunt of the fall in labor share.

### Empirical identification approach (Box 1)
- Staff adopt a two-step synthetic control approach comparing actual developments (red lines) with counterfactuals without the 2012 reforms (blue lines).
- The counterfactual is estimated as the time-variant country-specific components from a group of advanced OECD countries using the synthetic control method; procedure includes removing time-invariant country-specific component, cleaning for common shocks, detrending by fitting pre-reform trend and extending post-reform.

---

### The Risk of Losing a Job: What Role May Higher Minimum Wages Play? (Box 2)

### Key empirical findings on the 2017 minimum wage increase
- The 2017 minimum wage increase was "by 8 percent."
- Machine learning on micro-level Continuous Sample of Working Lives data identifies age, type of contract, tenure, and region as key drivers of job-loss probability after the increase.
- Specific estimated effects:
  - Minimum wage earners older than 37 years with tenure at least nine months but less than six years had "17 percentage points higher probability of losing their jobs" relative to comparable workers just above minimum wage.
  - For younger people (below 38 years) from regions with a minimum-to-median wage ratio above 48 percent, the job-loss probability was "nearly 16 percentage points higher" than for workers from other regions.
- Labor market duality amplifies job-loss probabilities:
  - Older (than 38 years) low wage earners with less than nine months tenure had a "77 percent probability of losing their jobs" compared with a "12 percent probability" for low wage earners with more than six years in their job.
  - For young people in regions with a high minimum-to-median wage ratio, the job-loss probability was "16 percentage points higher" for workers under temporary contracts than for those under permanent contracts.

### Interpretative points and policy relevance
- Negative employment effects of minimum wage increases may be concentrated among:
  - Older low-wage workers with intermediate tenure.
  - Younger workers on temporary contracts in regions where the minimum-to-median wage ratio is high.
- Regions with higher minimum-to-median wage ratios are also those with high unemployment and poverty rates, implying minimum wage increases may disproportionately affect the worst-off regions.
- Complementary policies (e.g., EITC) are recommended to support low-income households and mitigate in-work poverty without concentrating job-loss risks among vulnerable groups.

---

### Labor Market Duality and Severance Pay Reform — Overview

### Characterization of duality in Spain’s labor market
- High prevalence of temporary employment has been a prominent feature since the 1990s; labor market remains "largely segmented."
- The share of temporary jobs in overall employment remains "among the highest in the EU," particularly for the young and low-skilled.
- Transition probabilities from fixed-term to open-ended contracts are "very low relative to EU peers."
- Large volume of very short-duration contracts:
  - Average share of temporary contracts with duration less than a week reached "about 30 percent in 2019."
  - Share for contracts lasting less than a month was "about 43 percent."

### Associated economic costs of duality
- Persistent duality is associated with:
  - High employment volatility (temporary contracts play disproportionate role in adjustment).
  - Low productivity growth (dual labor markets impede training and reallocation toward productive jobs).
  - Rising income inequality (temporary and especially young/low-skilled workers suffer worse wage dynamics and bear larger adjustment costs).

### Implications for severance pay reform
- Addressing severance pay and contract design is part of tackling labor market segmentation and its adverse effects on volatility, productivity, and inequality.
- Reform directions and recommendations:
  - Simplify the menu of contracts; introduce a single open-ended contract with severance pay rising smoothly with tenure.
  - Complement the single contract with separate contracts for specific purposes (e.g., staff training, seasonal demand).
  - Maintain positive severance pay to prevent inefficient layoffs where firms do not internalize the cost of financing unemployment benefits.
  - Introduce an Austrian-style separation fund to make severance entitlements portable across jobs and reduce disincentives to job-to-job mobility.
  - Reduce legal and administrative uncertainties in dismissal procedures, including simplifying causes for nullifying a dismissal and differentiating corrective actions between procedural and substantial grounds.

---

### The Austrian “separation fund” model (Austrian backpack) and simulation evidence

### Austrian backpack features and advantages
- Austria (2002) replaced traditional severance pay with individual saving accounts (the “Austrian backpack”).
- Employers contribute a fraction of an employee’s salary into an individual, portable fund; the contribution fraction cited: 1.53 percent.
- Advantages identified:
  - Portability allows severance payments to grow with tenure without attachment to one firm, reducing obstacles to voluntary mobility.
  - Marginal costs of dismissing workers do not vary by seniority, preventing “last-in-first-out” dismissal practice.
  - Continuous contributions can ease firms’ financial-constraint problems, especially for SMEs, by avoiding lump-sum payments at downturns.
- Empirical evidence on Austria’s reform: mixed. Early studies found limited effect on mobility; more recent work suggests a substantial increase in job-to-job mobility.

### Simulation evidence on reform scenarios (Conde Ruiz et al., 2011)
- Simulation scenario figures (preserving original reported scenario figures exactly; cost calculated as expected days of compensation or contribution to the Austrian fund as a percent of total annual salary):
  - S1: post-2010 reform11.0-12.98.2
  - S2: single open-ended contract-2.5-96.132.7
  - S3: post-2010 reform + Austrian fund18.5-13.88.2
  - S4: single contract + Austrian fund10.3-96.132.7
- Summary conclusions from simulations:
  - A single contract alone could reduce the share of temporary employment to a minimum and extend expected job duration while lowering dismissal costs for employers, but would reduce employees’ expected severance payments substantially relative to the status quo.
  - The single contract plus Austrian fund (mixed model) could reduce duality while allowing most workers to receive higher expected severance payments throughout working lives compared to the status quo (except the young and qualified); employer dismissal costs under this model are similar to the existing 2011 system.
  - The 2011 system plus an Austrian fund yields the highest expected dismissal cost with almost no impact on duality.
  - Key conclusion: the mixed proposal of a single contract and an Austrian fund has the potential to meaningfully reduce labor market segmentation in Spain without raising dismissal cost for firms or reducing employment protection for workers.

---

### Policies for youth integration, skills, and other measures

### Active labor market policies and skills
- Focus active labor market policies on improving employability of young people and the long-term unemployed.
- Implementation should be guided by expenditure reviews from the independent fiscal council (AIReF) to ensure optimal resource allocation and well-targeted program design.
- Improve training and education outcomes and enhance incentives for labor mobility:
  - Better coordination between businesses and universities and increased business involvement in vocational curricula.
  - Enhance lifelong learning to adapt existing human capital to changing skill demand.

### Addressing short-duration contracts and Workers’ Statute update
- Investigate and address the rising trend in very short duration contracts—especially among youth and low-skilled workers—through thorough analysis and measures against abuse.
- Authorities’ plan to update the Workers’ Statute is positive but should aim to improve workers’ social welfare without eroding competitiveness.

---

### A host of additional policies can enhance rental affordability

### Key findings on rental affordability
- The elasticity of housing supply in Spain is estimated to be relatively low (see Inchauste et al., 2018).
- Rental prices have recently increased in many provinces (data from Idealista up to 2018).
- Affordability problems have worsened in some locations.
- Definition: overburden rate = share of the population living as tenants with market rental prices whose total housing costs (net of housing allowances) represent more than 40 percent of the total disposable household income (net of housing allowances).
- Higher rental prices are driven in part by:
  - stronger demand for renting after the Great Recession,
  - demographic changes (including population growth),
  - supply shortages — properties tend to be rented faster where rental prices grow more.
- Rising gross rates of return have started to encourage more private investment in rental housing.
- The stock of social rental housing is low in Spain vis-à-vis other advanced economies (OECD Affordable Housing Database).

### Supply-side and regulatory constraints
- Variation across provinces in the efficiency of building regulation:
  - The World Bank "Doing Business" indicator 'Procedures (No. of steps) to build a warehouse' used as a proxy for dealing with construction permits; provinces with more procedures tend to show different advertised rental and sale price growth patterns (analysis period 2014-18).
- Dealing with Construction Permits comparisons show differences in Procedures, Time, and Cost of compliance.
- Median time on market of listed rental properties correlates with average annual growth of advertised rental prices (averages, 2014-18).

### Policy priorities recommended
- Tackle supply-side constraints while ensuring swift access to rent support for the neediest.
- Specific priorities may include:
  - (i) easing and simplifying land use regulation;
  - (ii) accelerating rezoning processes, especially for affordable housing development;
  - (iii) increasing the stock of social rental housing, targeting it primarily to low-income people;
  - (iv) improving the efficiency of regional processes for granting tenant allowances;
  - (v) ensuring good public infrastructure between fast-growing cities and more affordable locations.

---

### Spanish women face high temporary employment and long-term unemployment

### Labor market outcomes and gender gaps
- Both women and men in Spain have the largest share of temporary employment in the euro area.
- Women’s temporary employment rates tend to be higher than those of men, but differences are not particularly prominent by European standards.
- The share of long-term unemployment among women in Spain is ranked as one of the highest in the euro area.
- Spain is one of the few European countries where the share of long-term unemployed among women is consistently larger than that among men.

### Political and corporate representation
- Between 2003 and 2020, the percentage of women parliamentarians rose by about 15 percentage points.
- The share of women in ministerial positions surged to nearly 67 percent in 2019, and was 50 percent in the coalition government that took office in January 2020.
- Inequality between men and women in managerial positions is in line with the OECD average.
- Women’s representation in top executive positions in largest listed companies is one of the lowest among euro area peers.

### Gender wage gap and contributors
- Unadjusted male-female differential in hourly earnings was about 15 percent in 2017.
- After controlling for occupation, industry, and other characteristics, the gender wage gap declines to about 10 percent.
- Staff analysis finds occupation and industry segregations are the main contributors to Spain’s gender wage differentials.

### COVID-19 impacts and policy considerations
- Both male and female workers experienced substantial job losses in 2020:Q2, with the year-over-year decline slightly higher for women than for men.
- Increase in men’s unemployment rate was higher than that of women’s in Q2 2020, resulting in a moderate narrowing of the gender gap (negative) in Q2.
- Declines in active population and part-time employment among men were stronger compared with women in Q2 2020.
- Women employees had a larger reduction in total weekly working hours than men, partly due to stronger take-up of the short-time work scheme (ERTEs).
- Household-survey evidence (Farré, Fawaz, González, & Graves, 2020, early May 2020, ages 24–50) finds women were more likely to be furloughed, become unemployed, or work from home, and took more responsibilities in housework and childcare during confinement.
- Policy recommendations:
  - Near-term: limit scarring effects of the pandemic and protect women’s wellbeing; promote work-life balance through extensions of income support to the vulnerable and further promotion of teleworking.
  - Leverage structural changes: increased paternal involvement in childcare and wider adoption of teleworking.
  - Use EU Recovery and Resilience Facility resources to advance the gender policy agenda.
  - Boost family and childcare support: about 38 percent of children under age 3 in Spain were enrolled in some forms of early childhood education and care in 2018.
  - Design leave policies to bridge the gap between maternity and paternity leaves and incentivize fathers to take paternity leave; recent extension of paternity leave from 8 to 16 weeks is highlighted.
  - Increase working arrangement flexibility while ensuring expansion of high-quality part-time jobs and guarding against long-lasting career penalties for women.

*International Monetary Fund — Chapter excerpt as provided in the supplied PDF chapter.*

### 1. The Impact of the 2012 Labor Market Reforms on Absolute and Relative Measures

### 1. The Impact of the 2012 Labor Market Reforms on Absolute and Relative Measures of Living Standards

### Effects of the 2012 labor market reforms on macro and distributional outcomes
- The 2012 reforms "catalyzed the recovery," reversing some negative socioeconomic effects of the crisis.
- The growth in GDP per capita after the reforms was largely driven by greater labor utilization; contribution from labor productivity growth was marginal.
- The reforms helped reduce unemployment: the unemployment rate fell "by more than 13 percentage points from its post-crisis peak."
- The reforms improved income equality: staff analysis finds a "lower path for the post-reform Gini coefficient compared to a possible evolution ... in the absence of the reforms."
- However, the reforms appear to have:
  - Reduced average hours worked.
  - Contributed to more in-work poverty.
  - Had no systematic impact on the risk-of-poverty of the overall population (per staff analysis).
- Possible mechanisms for reduced hours and more in-work poverty:
  - Reduced duration of temporary contracts in recent years.
  - Greater flexibility of part-time contracts and allowance for overtime for part-time workers introduced in 2012, increasing attractiveness of part-time contracts for employers.
  - Structural shift toward the service sector with higher demand for part-time employment.

### Long-term structural concerns highlighted
- "Declining labor shares contributed to more unequal income distributions": in 2018 the labor share in Spain was "more than 5 percentage points below its 1995 level."
- More than half of jobs in Spain are at "high risk of automation or risk of significant change (OECD, 2018)," implying strong forces that could extend the declining labor share absent compensating measures.
- Lower labor shares are associated with higher income inequality, partly because capital ownership is concentrated among wealthier households and low-skilled workers bore the brunt of the fall in labor share.

### Empirical identification approach (Box 1)
- Staff adopt a two-step synthetic control approach comparing actual developments (red lines) with counterfactuals without the 2012 reforms (blue lines).
- The counterfactual is estimated as the time-variant country-specific components from a group of advanced OECD countries using the synthetic control method; details: remove time-invariant country-specific component, clean for common shocks, detrend by fitting pre-reform trend and extending post-reform.

### Policy implications drawn in this section
- The reforms delivered notable macro benefits (employment gains) but also generated distributional and labor-quality trade-offs (lower hours, more in-work poverty).
- Elements of the 2012 reform package (part-time flexibility, overtime rules, short temporary-contract prevalence) should be "carefully reviewed to address possibly unintentional consequences."
- To support low-income households and tackle in-work poverty, authorities could consider an Earned Income Tax Credit (EITC) program as a complement to the Minimum Income Scheme; EITC programs "are typically more efficient" for targeting low-income workers and stimulating labor force participation than relying predominantly on minimum wage increases.

*Source: Box and sections titled "The Impact of the 2012 Labor Market Reforms on Absolute and Relative Measures of Living Standards" from the provided IMF content.*

---

### The Risk of Losing a Job: What Role May Higher Minimum Wages Play? (Box 2)

### Key empirical findings on the 2017 minimum wage increase
- The 2017 minimum wage increase was "by 8 percent."
- Using machine learning on micro-level Continuous Sample of Working Lives data, staff identify age, type of contract, tenure, and region as key drivers of job-loss probability after the increase.
- Specific estimated effects:
  - Minimum wage earners older than 37 years with tenure at least nine months but less than six years had "17 percentage points higher probability of losing their jobs" relative to comparable workers just above minimum wage.
  - For younger people (below 38 years) from regions with a minimum-to-median wage ratio above 48 percent, the job-loss probability was "nearly 16 percentage points higher" than for workers from other regions.
- Labor market duality amplifies job-loss probabilities:
  - Older (than 38 years) low wage earners with less than nine months tenure (largely on temporary contracts) had a "77 percent probability of losing their jobs" compared with only a "12 percent probability" for low wage earners who had been in their job for more than six years (predominantly under fixed-term contracts).
  - For young people in regions with a high minimum-to-median wage ratio, the job-loss probability was "16 percentage points higher" for workers under temporary contracts than for those under permanent contracts.

### Interpretative points and policy relevance
- Negative employment effects of minimum wage increases may be concentrated among:
  - Older low-wage workers with intermediate tenure.
  - Younger workers on temporary contracts in regions where the minimum-to-median wage ratio is high.
- Regions with higher minimum-to-median wage ratios are also those with high unemployment and poverty rates, so minimum wage increases may disproportionately affect the worst-off regions.
- Complementary policies (e.g., EITC) are recommended to support low-income households and mitigate in-work poverty without concentrating job-loss risks among vulnerable groups.

*Source: "The Risk of Losing A Job: What Role May Higher Minimum Wages Play?" Box and associated figures from the provided IMF content.*

---

### Labor Market Duality and Severance Pay Reform — Overview

### Characterization of duality in Spain’s labor market
- High prevalence of temporary employment has been a prominent feature since the 1990s; labor market remains "largely segmented" despite reforms.
- The share of temporary jobs in overall employment remains "among the highest in the EU," particularly for the young and low-skilled.
- Transition probabilities from fixed-term to open-ended contracts are "very low relative to EU peers."
- Large volume of very short-duration contracts:
  - Average share of temporary contracts with duration less than a week reached "about 30 percent in 2019."
  - Share for contracts lasting less than a month was "about 43 percent."

### Associated economic costs of duality
- Persistent duality is associated with:
  - High employment volatility (temporary contracts play disproportionate role in adjustment).
  - Low productivity growth (dual labor markets impede training and reallocation toward productive jobs).
  - Rising income inequality (temporary and especially young/low-skilled workers suffer worse wage dynamics and bear larger adjustment costs).

### Implications for severance pay reform (section lead-in)
- The document introduces a section on severance pay and reform proposals (sections A and B follow in the source).
- Rationale: addressing severance pay and contract design is part of tackling labor market segmentation and its adverse effects on volatility, productivity, and inequality.

*Source: "Labor Market Duality and Severance Pay Reform" and related figures and text from the provided IMF content.*

Italic: IMF staff paper content as provided in the supplied PDF chapter.

### 3.      The large gap in firing costs between permanent and temporary jobs is the main

### 3.      The large gap in firing costs between permanent and temporary jobs is the main contributor to Spain’s labor duality

### Causes of labor duality
- The divide in the stringency of employment protection legislation in Spain originates in the early 1980s, when a two-tier labor market reform liberalized the use of temporary contracts.
- The large difference in dismissal costs between permanent and temporary contracts created a strong disincentive for employers to offer open-ended contracts, contributing to a high reliance on fixed-term contracts to carry out workforce adjustment to shocks.
- A rigid collective bargaining system that limited the scope of wage adjustment during the crisis reinforced reliance on temporary contracts.

### Key empirical and legal figures on dismissal costs
- Severance pay for unfair dismissal under permanent contracts: 33 days’ pay per year of service, up to a maximum of 24 months’ pay.
- Severance pay for fair dismissal under permanent contracts: 20 days’ pay per year worked, up to a maximum of 12 months’ pay.
- Severance pay for temporary contracts: 12 days’ pay per year of service.

### Impact of the 2012 labor market reform
- The 2012 reform aimed to enhance firms’ internal flexibility, reduce duality, reduce hiring and separation costs of permanent workers, and narrow the protection gap by increasing severance pay for temporary employees.
- Empirical evidence suggests positive effects on alleviating duality, but the economic significance is small (IMF 2015; García-Pérez and Domènech 2017).
- The limited impact is partly due to the still large difference in termination costs between permanent and temporary contracts.

### Reform proposals to reduce duality
- Simplify the menu of contracts available to firms; for example, introduce a single open-ended contract with severance pay rising smoothly with tenure.
- Complement the single contract with separate contracts for specific purposes (e.g., staff training, seasonal demand in tourism and agriculture).
- Maintain positive severance pay to prevent inefficient layoffs where firms do not internalize the cost of financing unemployment benefits.
- Address potential disincentives to job-to-job mobility created by seniority-linked severance pay by introducing an Austrian-style separation fund that makes severance entitlements portable across jobs.

### The Austrian “separation fund” model (Austrian backpack)
- Austria (2002) replaced traditional severance pay with individual saving accounts (the “Austrian backpack”).
- Employers contribute a fraction of an employee’s salary into an individual, portable fund; the contribution fraction cited: 1.53 percent (Austria’s case).
- Advantages identified:
  - Portability allows severance payments to grow with tenure without attachment to one firm, reducing obstacles to voluntary mobility.
  - Because compensation accrues during employment, marginal costs of dismissing workers do not vary by seniority, preventing “last-in-first-out” dismissal practice.
  - Continuous contributions can ease firms’ financial-constraint problems, especially for SMEs, by avoiding lump-sum payments at downturns.
- Empirical evidence on Austria’s reform: mixed. Early studies found limited effect on mobility (Hofer et al. 2012); more recent work suggests a substantial increase in job-to-job mobility (Kettemann et al. 2017).

### Simulation evidence on reform scenarios
- Conde Ruiz et al. (2011) used individual-level data to evaluate: (i) a single open-ended contract; (ii) a single contract combined with an Austrian fund (mixed model); and (iii) the existing system in 2011 combined with an Austrian fund.
- Qualitative simulation findings (preserving original reported scenario figures exactly):
  - S1: post-2010 reform11.0-12.98.2
  - S2: single open-ended contract-2.5-96.132.7
  - S3: post-2010 reform + Austrian fund18.5-13.88.2
  - S4: single contract + Austrian fund10.3-96.132.7
  - Note (from source): Cost is calculated in terms of expected days of compensation or contribution to the Austrian fund as a percent of total annual salary.
- Summary of simulation conclusions:
  - A single contract alone could reduce the share of temporary employment to a minimum and extend expected job duration while lowering dismissal costs for employers, but would reduce employees’ expected severance payments substantially throughout working lives relative to the status quo.
  - The single contract plus Austrian fund (mixed model) could achieve similar reductions in duality while allowing most workers to receive higher expected severance payments throughout working lives compared to the status quo (except the young and qualified); employer dismissal costs under this model are similar to the existing 2011 system.
  - The 2011 system plus an Austrian fund yields the highest expected dismissal cost with almost no impact on duality.
  - Key conclusion: the mixed proposal of a single contract and an Austrian fund has the potential to meaningfully reduce labor market segmentation in Spain without raising dismissal cost for firms or reducing employment protection for workers.

### Other recommended legal and administrative measures
- Reduce legal and administrative uncertainties that create obstacles in dismissal procedures, including:
  - Simplifying the list of possible causes for nullifying a dismissal.
  - Differentiating corrective actions between annulments based on procedural and substantial grounds (see IMF Country Report No. 17/23).

### Policies for youth integration and skills
- Active labor market policies should focus on improving employability of young people and the long-term unemployed.
  - Recently adopted action plans are important; implementation should be guided by expenditure reviews from the independent fiscal council (AIReF) to ensure optimal resource allocation and well-targeted program design.
- Improve training and education outcomes and enhance incentives for labor mobility to help young and low-skilled unemployed reenter the labor market (see IMF Country Report No. 18/330).
  - Better coordination between businesses and universities and more business involvement in vocational curricula can boost labor market access for young graduates and meet employer skill needs.
  - Enhance lifelong learning to ensure timely adaptation of existing human capital to fast-changing skill demand.
- Address the rising trend in very short duration contracts—especially among youth and low-skilled workers—through thorough analysis and measures against abuse.
- Authorities’ plan to update the Workers’ Statute is positive but should aim to improve workers’ social welfare without eroding competitiveness.

---

*International Monetary Fund — Chapter excerpt on Spain: labor market duality, reform proposals, and related policy considerations*

### 6.      A host of additional policies can enhance rental affordability.

### 6.      A host of additional policies can enhance rental affordability.

### Key findings on rental affordability in Spain
- The elasticity of housing supply in Spain is estimated to be relatively low (see Inchauste et al., 2018).
- Rental prices have recently increased in many provinces (data from Idealista up to 2018).
- Affordability problems have worsened in some locations.
- The overburden rate is defined as the share of the population living as tenants with market rental prices whose total housing costs (net of housing allowances) represent more than 40 percent of the total disposable household income (net of housing allowances).
  - Eurostat/EU-SILC comparisons use 2007, 2013, and 2018 (note: for Switzerland and Germany the 2007 datapoint is replaced by 2010).
- Higher rental prices are driven in part by:
  - stronger demand for renting after the Great Recession,
  - demographic changes (including population growth),
  - supply shortages — with evidence that properties tend to be rented faster where rental prices grow more.
- Rising gross rates of return have started to encourage more private investment in rental housing.
- The stock of social rental housing is low in Spain vis-à-vis other advanced economies (OECD Affordable Housing Database).

### Supply-side and regulatory constraints (evidence)
- There is variation across provinces in the efficiency of building regulation:
  - The World Bank "Doing Business" indicator 'Procedures (No. of steps) to build a warehouse' is used as a proxy for dealing with construction permits; provinces with more procedures tend to show different advertised rental and sale price growth patterns (analysis period 2014-18).
- Dealing with Construction Permits (Criteria based on regulations to build a warehouse) comparisons across countries show differences in:
  - Procedures: number of steps to comply with formalities.
  - Time: weeks to comply with formalities.
  - Cost of compliance: percent of warehouse value.
- Median time on market of listed rental properties correlates with average annual growth of advertised rental prices (averages, 2014-18).

### Policy priorities recommended
- Focus on tackling supply-side constraints while ensuring swift access to rent support for the neediest.
- Specific priorities may include:
  - (i) easing and simplifying land use regulation;
  - (ii) accelerating rezoning processes, especially for affordable housing development;
  - (iii) increasing the stock of social rental housing, targeting it primarily to low-income people;
  - (iv) improving the efficiency of regional processes for granting tenant allowances;
  - (v) ensuring good public infrastructure between fast-growing cities and more affordable locations.

### Supporting evidence and data notes
- Sources cited for empirical and comparative context include Idealista; INE; Eurostat based on EU-SILC; World Bank "Doing Business" 2015 and 2019; IMF staff calculations.
- For some charts and comparisons:
  - Analysis of cumulative growth of advertised rental or sale prices covers 2014-18.
  - Rental price dynamics and affordability indicators use data points including 2007, 2013, 2018 (and 2010 for some countries in place of 2007).
  - Data for capital cities of 50 provinces (Ceuta and Melilla excluded); complete annual data from Idealista were available only until 2018.
  - Bubble sizes in province-level figures represent provinces' population levels as of 2018.

*Source: 1espea2020002 - 6.      A host of additional policies can enhance rental affordability.*

### 8.      Spanish women face high temporary employment and long-term unemployment

### 8.      Spanish women face high temporary employment and long-term unemployment

### Labor market outcomes: temporary employment and long-term unemployment
- Both women and men in Spain have the largest share of temporary employment in the euro area.
- Women’s temporary employment rates tend to be higher than those of men, but the differences are not particularly prominent by European standards.
- The share of long-term unemployment among women in Spain is ranked as one of the highest in the euro area.
- Spain is one of the few European countries in which the share of long-term unemployed among women is consistently larger than that among men.

### Political representation and corporate leadership
- Between 2003 and 2020, the percentage of women parliamentarians rose by about 15 percentage points.
- The share of women in ministerial positions surged to nearly 67 percent in 2019, the highest worldwide, and was 50 percent in the coalition government that took office in January 2020.
- Inequality between men and women in managerial positions is in line with the OECD average.
- Women’s representation in top executive positions in largest listed companies is one of the lowest among euro area peers.

### Gender wage gap
- Unadjusted male-female differential in hourly earnings was about 15 percent in 2017.
- The gender pay gap widened sharply during the global financial crisis, subsequently narrowed, and since 2015 expanded again but remained below the euro area average.
- Staff analysis finds occupation and industry segregations are the main contributors to Spain’s gender wage differentials.
- Once controlling for occupation, industry, and other individual and job characteristics, the gender wage gap declines to about 10 percent.

### COVID-19 impacts on gender equality
- Both male and female workers experienced substantial job losses in 2020:Q2, with the year-over-year decline slightly higher for women than for men.
- The increase in men’s unemployment rate was higher than that of women’s in Q2 2020, resulting in a moderate narrowing of the gender gap (negative) in Q2.
- Declines in active population and part-time employment among men were stronger compared with women in Q2 2020.
- Women employees had a larger reduction in total weekly working hours than men, in part due to stronger take-up of the short-time work scheme (ERTEs).
- Household-survey evidence (Farré, Fawaz, González, & Graves, 2020, early May 2020, ages 24–50) finds women were more likely to be furloughed, become unemployed, or work from home (if they still had a job) during the lockdown, and took more responsibilities in housework and childcare during confinement; some narrowing in unpaid housework hours gap occurred due to increased contributions from men.

### Policy considerations and recommendations
- Near-term priorities:
  - Limit scarring effects of the pandemic and protect women’s wellbeing.
  - Promote work-life balance through extensions of income support to the vulnerable and further promotion of teleworking.
- Leverage structural changes from the pandemic:
  - Increased paternal involvement in childcare and wider adoption of teleworking may shift social norms and business models toward greater flexibility.
  - Use resources under the EU Recovery and Resilience Facility to advance the gender policy agenda.
- Boost family and childcare support:
  - About 38 percent of children under age 3 in Spain were enrolled in some forms of early childhood education and care in 2018, which is close to the OECD average but relatively low compared with euro area peers.
  - Relative low level of public spending (per child) suggests room for more and more efficient expenditure on childcare services.
  - Design leave policies to bridge the gap between maternity and paternity leaves and incentivize fathers to take paternity leave; recent extension of paternity leave from 8 to 16 weeks is highlighted as an important step.
- Increase working arrangement flexibility:
  - Low level of voluntary part-time employment in Spain warrants analysis of supply and demand drivers.
  - Employer-side obstacles include more expensive social security contribution cost relative to hiring full-time workers, sizeable administrative and other fixed costs, and a somewhat protective legal framework.
  - Worker-side obstacles include limited training opportunities in part-time jobs and potential long-lasting career consequences.
  - Policy actions should encourage expansion of high-quality part-time jobs and complement them with parental leave policies and childcare support, while ensuring flexibility does not deter women’s career development.

*Source: 1espea2020002 - 8.      Spanish women face high temporary employment and long-term unemployment*

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_Source: https://www.imf.org/-/media/files/publications/cr/2020/english/1espea2020002.pdf_