Like a river that shifts with the seasons, debates about the labor market rise and fall as political triggers used by both government and opposition in their rhetoric. At the pandemic’s outset, questions about the origin of the first postmortem data dominated Congress, and today the focus is on how discontinuous contracts are counted and whether those adjustments distort the overall unemployment picture.
Beyond party lines, economists consulted for this report agree that this contractual category — reinforced by the latest labor reform — has gained visibility. Unemployment figures used to be a straightforward gauge of what is happening, but new indicators are being developed to better reflect how people enter, leave, and stay in the labor market. Institutions like BBVA Research, led by Rafael Doménech, are pursuing alternative measures to better illuminate labor market dynamics.
The Labor Department has already begun extracting and standardizing data related to this contract type, a move aimed at helping researchers and analysts work with greater clarity. Some economists welcome the transparency, while others, such as Carlos Martín Urriza of the CCOO economic cabinet, link the reform to ongoing staff shortages at agencies like Sepe, which faced delays even before the pandemic.
partisan dart
The debate over non-permanent contracts intensified in June 2022, when Spain’s unemployment count dropped to three million and PP leader Alberto Núñez-Feijóo accused the government of inflating confidence about job market strength. Critics argued that the government overstated resilience in the labor market over the prior year.
It wasn’t the first time the PP questioned government statistics. In September, Elvira Rodríguez, the PP’s economy chief, and Pablo Casado accused the administration of manipulating growth data. The charge of “faking” data recurred as the discourse shifted from jobs to the broader health of the economy.
Feijóo’s argument centers on a key point: a worker who becomes permanently discontinuous was formerly temporary. If that worker was unemployed when the temporary contract expired, they appeared on unemployment registers. Now, as a worker who is permanently discontinuous, they stay attached to the payroll but do not appear in unemployment counts because they are not actively working while still being bound to the employer, with the expectation of recall or compensation if not called.
“This discussion is not new; there have long been workers who were inactive during the pandemic but not counted as unemployed,” notes Doménech of BBVA.
uncertain origin
The government counters that the method for counting discontinuous fixes has not changed. Yet four economists consulted for this report note some ambiguity. Florentino Felgueroso of Fedea contests the claim that the counting method was fixed on March 11, 1985, since the ministerial order in question does not clearly specify the intermittent landline figure. He suggests the origin lies somewhere between 1985 and 1998 and admits the record is not definitive.
Beyond the origin, the central question is whether the growth of such contracts distorts unemployment data. All economists consulted agree that registered unemployment has never been fully reliable, and in fact it does not satisfy the statistical requirements of the International Labour Organization. Administrative data undercounts the total number of unemployed people, as not everyone is eligible for benefits and many do not register due to the burdensome process.
Thus, INE’s active population survey typically shows higher unemployment than Sepe records, and economists advise tracking month-to-month labor market changes by looking at Social Security membership, i.e., how many people are active and contributing. In these statistics, intermittent contracts only count when employment is active, which can mask those who are not currently working but remain tied to employers. Sergi Jiménez of UPF stresses that the most relevant indicator remains continued commitment to work.
Are all perpetual contracts perpetual discontinuity?
Beyond unemployment statistics, the broader debate on perpetual contracts asks how much these arrangements contribute to what Feijóo labeled “vague instability.” What share of total contracts do perpetual agreements represent?
In 2022, 7.02 million permanent contracts were signed. About 54% were full-time, with the rest split between part-time and permanently discontinuous arrangements. This means the reform’s first year saw a large jump in total permanent contracts, up by roughly 232 percent from the previous year. An executive from CCOO’s economic cabinet notes that the reform left many conversations about real gains unspoken, as the surface numbers hid the deeper changes in the labor landscape.
transparency criticism
Rafael Doménech of BBVA Research argues that registered unemployment data could be more transparent and informative. He notes movements in statistics that have affected more than 100,000 workers over a short period and urges clearer communication of what counts and when.
Doménech points to the October 2022 adjustment to counting criteria, which coincided with a notable unemployment drop in a seasonally affected month. The Labor Ministry defended the reform, saying its effects softened the apparent impact of shorter-term impermanence. Felgueroso of Fedea emphasizes that government critics often want more information, and UPF’s Sergi Jiménez agrees that greater transparency would benefit all researchers who analyze the labor market.