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The award for seniority in the company slows down productivity per hour worked

Date: April 24, 2024 Time: 09:20:55

Almost 11 million workers had been in their current job for more than six years in the fourth quarter of 2023, according to the latest INE Active Population Survey. This is a figure that is close to maximum levels – recorded just a few months before, between April and June – and that has grown almost constantly in the last decade; especially after the pandemic. Although in percentage terms, the 51.6% of employed people who are in this situation is somewhat lower than the 59% reached in the financial crisis. However, it is something that worries the human resources sector due to its possible implication in productivity per hour worked, which has evolved downwards in the last year, according to seasonally adjusted data from National Accounts.

“It’s a graph that keeps me up at night,” admitted the general director of Hays for Southern Europe at the presentation of the ‘2024 Labor Market Guide’ last Tuesday. “Currently, the only security that a worker has is seniority,” he pointed out in reference to the way in which compensation for unfair dismissal is calculated. The regulations state that the employee is entitled to a payment equal to 33 days of salary per year worked for all contracts signed after the entry into force of the 2012 labor reform, while it may reach 45 days of salary in the case of that was signed before February 12 of that year.

Hays understands that this is a counterproductive element to improving the productivity of the Spanish labor market, since it acts as an incentive for workers to remain in their jobs even though they are not happy with their conditions or even motivated. After interviewing more than 6,000 professionals, they concluded that 57% were unmotivated, a somewhat lower percentage than that recorded in 2023 (61%) but no less significant. Furthermore, the percentage of workers who claim to have lost motivation in their job grows as their age increases; Generation Z (1998-2010) being the most satisfied with their working conditions and the ‘boomers’ the least. And all of them point to a salary increase to regain motivation in their company.

Studies are not clear about the effect on productivity

“It is not a new debate, in fact there was a lot of talk about this a few years ago when Ciudadanos proposed implementing the Austrian backpack. A worker who has been in a company for between 10 and 15 years is not interested in changing companies, because he loses the rights of Compensation” points out the economist and senior Fellow at EsadeEcPol, Manuel Hidalgo, in conversation with La Información. He values ​​that this can be an element that contributes to explaining productivity and refers to some studies that point in this direction, although he recognizes that the literature is not conclusive and weighs other elements beyond motivation, such as experience. . that a worker accumulates throughout his professional career that can act as a counterweight and boost the productivity of a given company.

Precisely a study prepared by Isabel de Sivatte, Ricardo Olmos and Mónica Martel and published by Funcas in 2018 points in this direction. “The results of our study suggest that older employees are more productive and that productivity does not decrease after a specific age,” these authors concluded. However, they also made reference to the fact that other researchers had pointed out in the opposite direction and highlighted the differences that occur depending on the type of job and the training required to carry it out. Thus, they saw that in the most complex jobs the relationship between age and productivity was positive, while in the most basic jobs this curve took the shape of an inverted ‘u’ and became negative once a certain age barrier was overcome.

These conclusions help to support that the problem would be caused by a number of factors and not by age itself, among which seniority would play an important role, especially in the case of unmotivated workers. Since, as Hidalgo also points out, in many cases the retirement of the most experienced workers and those with the strongest ties to the company also translates into a loss of productivity for the company in which they have developed a large part of their career. Likewise, the effect of the seniority award will be smaller in the generations that were most affected by the economic crisis, since once this ‘shield’ of protection against dismissal has been lost, it is no longer a significant element in the balance.

Is the Austrian backpack the solution?

Hays is in favor of opening a debate on the possible implementation of the Austrian backpack, regardless of partisan positions. However, the intention of the Minister of Labor and Social Economy, Yolanda Díaz, and especially that of the unions seems to move in the opposite direction, but it could distance itself in some way from this ‘award’ for seniority. The leader of Sumar already introduced in the last legislature the concept of “restorative dismissal” by which the company could not know how much a dismissal will cost before carrying it out, since other factors such as whether it is paying a mortgage, whether it has children . to positions or what their age is would be able to condition the amount of severance pay.

This matter is not in the most immediate roadmap of the second vice presidency, which expects the European Committee of Social Rights to rule on the claims that UGT and CCOO have presented separately, understanding that Spain does not comply with what is reflected in the European social letter on dismissal. The workers’ representatives also understand that compensation should not be able to be calculated in advance, while they have proposed recovering a minimum compensation for workers who have not reached a minimum number of months in the company before being unilaterally dismissed. . .

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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