Spanish law makes it difficult and expensive to dismiss conventionally employed workers, but the market has managed to route around that to some extent [J. Servulo Gonzalez, El Pais via Tyler Cowen]:
Temporary contracts were introduced in a labor reform approved in 1984 by the Socialist government of Felipe González, and they have remained in favor ever since – even more so during times of crisis, such as those currently being seen in Spain, where 93 out of every 100 contracts signed of late have been temporary.
Although the Spanish government has attempted to re-regulate temporary employment, as by forbidding renewal of temporary contracts — a step that obviously works to the disadvantage of some of the workers affected — it has also been forced to trim back some of the elaborate tenure protections for private-sector workers, who may now walk away with a maximum of two years’ salary as severance, down from three and a half years’.
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When I worked in the UK, in the 80s, they had robust employee protection laws. As a result, most employees were hired through third party “body shops.” As such, they had no protection.
The last thing on earth you want as a Spanish Company is to hire a Spaniard. It is economic suicide.
Hence the 46.2% Unemployment Rate for 15 to 24 year olds in Spain.