Spain Approves 37.5-Hour Workweek: Economic Impact & Business Concerns

Spain's left-wing government approved a plan on Tuesday to reduce the workweek to 37.5 hours.

Left-Wing Government Commitment

Spain, one of the world's fastest-growing economies, has made this decision despite expected resistance in parliament. Many business leaders have expressed concerns that this move could hinder the country's economic growth. However, the left-wing government remains committed to reducing the workweek from 40 hours to 37.5 hours without salary cuts by the end of 2025.

This initiative is part of the coalition agreement made with the far-left party, Sumar, in 2023. After over a year of political debate, the decision is expected to impact nearly 12 million workers in sectors like retail, hospitality, and agriculture. Notably, most public sector employees and large corporations in Spain already follow a 37.5-hour workweek.

Economic Modernization and Productivity Boost

Labor Minister Yolanda Díaz stated that the reform aims to modernize Spain and enhance productivity. However, business leaders were not involved in the agreement, which was signed last year with Spain's two main labor unions.

Concerns and Challenges

After 11 months of negotiations, business representatives withdrew from discussions, citing concerns over Spain’s labor market, especially as unemployment rates rose in January. They argue that the reform could harm certain industries.

Now, the government faces the difficult task of securing support from like-minded parties in parliament to pass the proposal. Additionally, opposition from two key business-aligned Catalan and Basque separatist parties adds further challenges.

Despite economic struggles in many European nations last year, Spain recorded an impressive 3.2% GDP growth, making this reform a significant move in its economic strategy.