Spain: Government implements National Youth Guarantee System

Last Friday, the Spanish Government approved Royal Decree-Law 8/2014, of 4 July, that approves urgent measures for growth, competitiveness and efficiency; in order to improve the employability of young people, implementing the National Youth Guarantee System (the "NYG System").

The aim of the NYG System is to enable unemployed young people who are not receiving formal education or training to receive job offers and training after completing their education or when they become unemployed.

Of the measures taken, the following should be highlighted:

• Creation of the "Youth Tariff", according to which companies that hire people under indefinite contracts (including seasonal contracts), fulltime (where the working day is at least 50% of the working day of a comparable fulltime employee) or part-time, will receive discounts on its Social Security contributions, according to the following scale:
  •  €300 per month: fulltime indefinite contract.
  •  €225 per month: part-time indefinite contract, when the working day is at least equivalent to 75% of the working day of a comparable fulltime employee.
  •  €150 per month: part-time indefinite contract, when the working day is at least equivalent to 50% of the working day of a comparable fulltime employee.

The company will receive this bonus for a period of six months, and this recruitment incentive will be in force until 30 June 2016. The discount will be applied to each company only once per beneficiary of the NYG System.

• Creation of the NYG System. People interested in being members of the NYG System should register. The database has the aim of providing the necessary information (in a systematic and unified manner) properly to manage and implement the NYG System's measures. Candidates will need to meet the following requirements to enrol in and benefit from the NYG System:
  • Members must be aged between 16 and 25 (or up to 30 if the employee has a degree of disability of 33% or above);
  •  They must be nationals of Spain, the EU, states that are party to the European Economic Agreement, or Switzerland (or the holders of a Spanish residence and work permit);
  • They must have they registered permanent residence in any town or city in Spanish territory;
  • They cannot have worked in the last 30 days;
  • They cannot have received education in the last 90 days or training in the last 30 days;
  • They must have made a commitment to participate actively in the different activities of the NYG System.
• Regarding training and apprenticeship contracts, the new regulations have increased the bonuses provided for in Law 11/2013, of 26 July. As a result, the deduction made to common contingencies contributions are increased by 50% for companies with fewer than 250 employees (up to a 100% deduction in contributions) and by 25% for companies with more than 250 employees (up to a 75% deduction). It is expected that additional bonuses will be included to finance the costs of the required tutoring of workers under those contracts.
• As for work experience contracts, they currently enjoy a 50% deduction on common contingencies contributions. The new Royal Decree establishes that companies that hire young people enrolled in the NYG System will benefit from an additional deduction of 50%, therefore enjoying a 100% deduction on their common contingencies contributions.