Spain bans layoffs over sickness in first step to roll back labour reform

Spain's cabinet voted on Tuesday to ban employers from dismissing workers due to illness, the first step in a planned overhaul of the country's 2012 labor reform. "From now on, nobody will be sacked for a legitimate medical absence," Labour Minister Yolanda Diaz said after the weekly cabinet meeting.

Prime Minister Pedro Sanchez's Socialist Party and his far-left coalition partners Unidas Podemos made overturning the 2012 legislation a pillar of their electoral campaigns, arguing that aspects of the law violated fundamental human rights. Diaz said the repeal of an article of the reform that permitted dismissals on the grounds of ill health, which lawmakers approved on Tuesday, would bring Spain closer in line with neighboring countries.

The European Court of Justice had previously warned Spain that firing employees due to illness violated anti-discrimination legislation, according to a statement from the Labour Ministry. "With this repeal, we are repairing an anomaly that separated our country from those around us," Diaz said.

Introduced by a previous conservative government, the labor reform allowed for greater flexibility in the labor market, making it easier to cut wages and cheaper to lay off workers. Supporters of the reform argue it helped convert Spain into a more competitive market, but detractors claim it eroded workers' rights and promoted the creation of more precarious low-wage jobs.

Since the reform was passed the country's unemployment rate has plummeted from 27% in early 2013 to 13.8% in the fourth quarter of last year as the economy began to recover from a financial crisis caused by the bursting of a real-estate bubble. The government now expects the decline in unemployment to stabilize, hitting 13.6% in 2020 and 12.3% by 2023.