Employment Contracts and Labor Market: Key Concepts

Posted on Dec 20, 2024 in Economy

Employment Contracts and Labor Law

An employment contract is an agreement between an employee and an employer where the employer agrees to pay a fee to receive services. The worker must be 18 years old, or if between 16 and 18, legally emancipated or with parental consent.

Key Elements of an Employment Contract

  • Place and date of the agreement
  • Identification of the parties
  • Name and category of the worker
  • Place of work
  • Working hours
  • Duration of the contract
  • Start date
  • Pay rate
  • Annual leave entitlement
  • Notice periods

Types of Employment Contracts

The trial period in a contract is limited by the applicable convention, typically six months for qualified roles and two months for others.

  • Permanent contracts are those that do not set a date for completion.
  • Fixed-term contracts are those with a fixed end date.
  • Contract for work or service: These have an uncertain duration, must be in writing, and entitle the worker to compensation of 8 days’ wages per year worked.
  • Interim agreement: Its goal is to replace workers whose contracts are suspended with a reservation of their jobs, often to cover a specific task. The duration is the time for which the replaced worker is suspended.
  • Internship contract (Contrato en prácticas): Its object is the insertion of young people without work experience who possess a university degree, technical degree, or senior technician qualification. The duration is between six months and two years, with two possible extensions to reach the maximum. Remuneration is not less than 60% of the standard salary for the role in the first year and 70% in the second.
  • Contract for production circumstances: These result from temporary increases in workload, with a duration of 6 months to 1 year. Compensation is 8 days per year worked.
  • Contract for substitution (Contrato de interinidad): Used to replace workers whose contracts are suspended to retain their position or to temporarily fill a position during the selection process. The duration corresponds to the time the employee is suspended.
  • Training contract (Contrato formativo): Aimed at youth without prior experience or relevant qualifications, with a duration between 6 months and 2 years.
  • Part-time contract: This contract provides for a lower number of hours than a full-time employment.
  • Phased retirement contract (Contrato de relevo): Seeks to hire an unemployed worker to replace the time being vacated by another employee who is transitioning to retirement.

Working Conditions

  • A night worker is someone who works at least three hours a day during the night shift or who plans to work at least one-third of their annual working days during this period.
  • Shift work involves rotating shifts to provide service at different times according to a certain rhythm, either continuously or discontinuously.
  • Overtime is considered any hour of work performed in excess of the maximum ordinary working hours.
    • Non-structural overtime: Maximum 80 hours per year.
    • Structural overtime: Unlimited, subject to specific conditions.
    • Overtime due to force majeure: Unrestricted.
  • Paid permits are granted for:
    • Marriage (15 days)
    • Birth of a child (2 or 4 days, depending on circumstances)
    • Moving house (1 day)
    • Preparation for childbirth (time required)

Vacation and Occupational Hazards

  • Vacation may not be compensated with money. The minimum period is 30 days and must be paid. By agreement between worker and employer, the holiday period should be known two months in advance. Once the holiday period has started, it may not be interrupted.
  • Paid public holidays are non-recoverable and may not exceed fourteen per year.
  • Occupational hazards refer to the possibility of a worker suffering an accident.
    • Specific pathologies: Accidents, illnesses.
    • Non-specific pathologies: Fatigue, dissatisfaction, stress, and aging.
    • Other pathologies: Mobbing, burnout.
  • Occupational diseases are changes in health caused by physical, chemical, or biological agents present in the workplace.
  • Prevention techniques include:
    • Safety at work (identifying problems)
    • Industrial hygiene
    • Ergonomics (adaptation to work)
    • Labor psychology (the study of psychological and social factors)
    • Occupational medicine (prevention, cure, repair)

Proper lighting allows workers to perform their functions more safely while increasing performance.

Prevention is the set of actions taken or planned at all stages of a company to avoid or reduce risks arising from work.

Psychosocial Risk Factors

  • Psychological: Anxiety, depression, euphoria, aggression, smoking, drug addiction, etc.
  • Psychosomatic: Physical and mental fatigue, headaches, insomnia, respiratory disorders, etc.
  • Psychosocial: Absenteeism, accidents, conflict, and quality defects.

Basic Economic Concepts

Economics is the science that studies how individuals and society manage scarce resources to better meet individual and collective needs.

The market is the place where buyers and sellers freely exchange goods, services, and factors of production.

  • Microeconomics focuses its study on the behavior of individual economic units.
  • Macroeconomics focuses its study on the overall functioning of the economy.

Perfectly Competitive Market

A perfectly competitive market is a theoretical representation of markets in which there are many buyers and many sellers, so that no single buyer or seller can influence the equilibrium price. Characteristics of perfect competition include:

  • A large number of buyers and sellers
  • A homogeneous product
  • Market transparency
  • Freedom of entry and exit

Supply and Demand

In a free market, demand dictates that at a higher price, the quantity consumers are willing to buy is lower, and at a lower price, the quantity is higher. Factors influencing demand include the price of complementary goods, substitute goods, and luxury goods.

The supply of a good consists of the amount that producers are willing to offer at a certain price. Variations in supply are influenced by the price of the commodity, the price of related goods, the price of production factors, technological development, and business objectives.

The equilibrium point is where supply equals demand. Excess demand leads to a shortage.

Key Economic Indicators

  • GDP (Gross Domestic Product) is the monetary value of final goods and services produced in an economy over a period of time.
  • CPI (Consumer Price Index) provides a statistical measure of the overall evolution of prices of goods and services consumed by the population living in households in Spain. Core CPI excludes food and energy. The Harmonized Index of Consumer Prices (HICP) provides a measure of price trends across the European Union.
  • Inflation is the continuing and widespread increase in prices of goods and services in an economy over a period of time.
  • Unemployment is measured by the National Statistics Institute (INE) through the Labor Force Survey (LFS), which surveys whether individuals are working or not. Another way of measuring unemployment is through the National Employment Institute (INEM).