The labor reform has not only changed the way of employing, but also of firing. Faced with the rise in indefinite modalities, which account for 40% of new contracts, companies have adapted the formulas to make workforce adjustments, bypassing the preventions included in the standard itself. The data for August give a good example of this.
64.2% of the withdrawals from the General Social Security Scheme in the month of August were due to eventual activities, either due to the end of a temporary contract (51.6%) (12.6% ).
It is a percentage almost ten points lower than that registered in the same month of 2019 (73.8%). The evolution is explained by the reduction in fixed-term contracts, which translates into a drop of 20 percentage points in terminations due to the expiration of a temporary contract, while those derived from discontinuous fixed-term contracts have skyrocketed by 415%.
There is the paradox that these have become the first cause of loss of affiliation of a worker with an indefinite contract, surpassing resignations and low resignations, despite the notable increase in the latter: they represent 9.8% of the total number of registered drops, when two years ago they only accounted for 2.9%. Even so, then they were the main reason why wage earners disappeared from the statistics.
This evolution confirms the impact of the intense increase in indefinite contracts and the volatility that it has caused in terms of additions and withdrawals. In fact, the loss of affiliation of the discontinuous permanent workers (who, when they become inactive, are discharged from Social Security but do not count as unemployed for the purposes of the Ministry of Labor statistics), have grown three times more than the resignations .
Something that reinforces this trend is that before the reform and the explosion of permanent contracts, resignations were concentrated in temporary ones. Something that seems logical: they have fewer disincentives than a permanent salary to risk changing jobs.
But now the dynamics have been reversed and it is the permanent ones who lead, by far the resignations. Although the resignations of permanent workers have also put a stop in August, falling 9%, the first setback since October 2021, before the entry into force of the norm. It seems that the worsening labor market acts as a deterrent to these resignations.
The trial period trick
But the spectacular rise of these phenomena runs the risk of hiding two other striking realities that point to the fact that, in this new panorama, companies are raising the appeal of dismissal as well as other similar formulas, albeit at a lower cost. This is the case of terminations for not complying with the trial period, an alternative that allows dismissal without compensation after a period of several months working.
After the labor reform, they have recorded a historic increase for permanent workers: they have shot up 587% from the levels of August 2019. And that in that month they have also taken a breather and have fallen 26% compared to July.
In this change, what happens with the layoffs, themselves, may go unnoticed. They occupy a small place among the casualties registered each month, just over 4%, although this is explained because the main cause for leaving a job is linked to its temporary nature and to the high turnover in the labor market, especially in the last years of employment growth (discounting the impact of the pandemic in the first months of 2020).
The failure of the forbidden to fire
However, its evolution has skyrocketed in 2022 and registers figures similar to those of the worst moments of the financial crisis, if we discount the peak of the first months of 2020. Losses due to layoffs increase by 126% compared to August last two years.
Despite the increase in permanent contracts, this evolution is surprising if we take into account that the labor reform itself includes measures that try to prolong the “forbidden firing” formulas of 2020, developing new ERTE mechanisms (.
As if the Government feared that this was not going to be enough to stop layoffs, the emergency measures due to the situation caused by the crisis in Ukraine also included formulas that linked aid to companies to maintaining employment. In light of the evolution of the data, it is clear that this concern was more than justified.
The complexity of the data
Estimating the number of workers actually affected by these layoffs and extinctions is complicated by the very design, sometimes contradictory, of the Social Security statistics. On the one hand, the data on registrations and cancellations of affiliation indicate that between August 1 and 31, 1,964,783 cancellations were registered only in the general regime (compared to 1,584,461 registrations). But the record detailing the reasons for cancellation reduces the balance only to 75,872.47.
In the case of temporary job losses, we would go from 48,755.32 casualties recorded in the average affiliation data to 1.28 million in the monthly variation data.
This is especially astonishing when used to measure the true scope of phenomena such as the Great Resignation: the average affiliation data for August shows 7,490 resignations of permanent workers, 9.9% of the total. If we extrapolate this percentage to the total, it would mean 192,548 people in just one month.
It must be kept in mind that this statistic was designed to analyze trends without being carried away by the volatility of affiliation (every day tens of thousands of new and low affiliation registrations can be recorded).
It does not intend to produce a strict monthly record, such as unemployment data, much less resemble the statistics of dismissals and resignations produced, for example, by the employment statistics services of the United States.
But, in any case, these trends of evolution and variation provide the keys to the evolution of the labor market. Also, they do it every month.
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