Spain could further cut severance pay and better match training programmes to business needs among new steps to reduce Europe’s second-highest jobless rate, the OECD organization of wealthy countries said in a report on Wednesday.
The report by the Organization for Economic Co-Operation and Development praised Spain, which is just emerging from a prolonged economic and financial crisis, for the deep labour market reform passed last year but said more could be done.
More than one in four Spanish workers is jobless, only Greece has a higher jobless rate in Europe, and about half of workers 18-25 years old are unemployed.
Centre-right Prime Minister Mariano Rajoy said on Wednesday the jobless rate at the end of 2013 would be unchanged from the end of last year but would improve next year.
Rajoy adopted new rules in 2012 making it cheaper for companies to lay off workers and limiting the power of labour unions to negotiate collective bargaining agreements across entire industries or geographic regions.
The 2012 labour market reform was one of the most successful reforms adopted by Rajoy, who has also drastically cut public spending to try to close a yawning budget gap and pull Spain out of a five-year economic and financial crisis.
The OECD report said preliminary analysis of the reforms showed they have helped bring down wages and made it easier for companies to adjust shifts and working conditions to avoid terminating workers.
The report estimated 25,000 new permanent contracts are signed every month, mostly in larger companies, due to the reform.
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