The Spanish government is encountering significant challenges in advancing its legislative agenda aimed at reducing the work week to 37.5 hours.

This proposal, championed by Second Deputy Prime Minister Yolanda Díaz, lacks the necessary support in Congress to progress.

The political party Junts has submitted a comprehensive amendment designed to halt the legislative process entirely.

Consequently, the Ministry of Labor is pivoting towards implementing changes concerning hourly attendance records through a Royal Decree.

This approach is constrained and will not allow for the degree of sanction enhancements initially envisioned by Díaz.

In defending this strategy, the Minister of Labor emphasized the regulatory nature of the time control, asserting that a Royal Decree can be enacted and comes into effect immediately.

However, raising penalties on companies for non-compliance with hourly records necessitates legal amendments, posing challenges in enforcing mandatory digital record-keeping under purely regulatory terms.

The benefit of the Royal Decree is that it does not require congressional validation, allowing the government to enact it directly, thus preserving some political capital amid the ambitious labor reform program.

The initial legislative proposal sought to amend the Workers' Statute to mandate digital and interoperable records, alongside modifications to the Social Violations and Penalties Law, which would change the penalty system from center-based fines to individual worker fines.

The planned regulation would have been limited to technical details related to interoperability and the implementation of the needed IT system.

Due to the technical nature of the regulation, no negotiations were conducted with labor unions and business associations.

Engagement with these social partners will now consist primarily of sending draft regulations for review.

Labor inspectors, responsible for ensuring compliance and enforcing penalties, have confirmed that the sanction regime cannot be modified through regulatory means.

There are also concerns regarding the feasibility of mandating digital record-keeping solely through a Royal Decree.

According to Jesus Prieto, a labor inspector and member of the Labor and Social Security Inspectors' Union, the most impactful aspect of the legislative proposal would be the modification of penalties, which are perceived as crucial for deterrence.

Currently, businesses face fines that range from €751 to €7,500, a sum seen as inadequate for curbing excessive overtime work.

The proposed legislative changes aim to increase fines to a maximum of €1,000 per worker, a substantial increase if assessed per individual.

Miguel Ángel Montero, another labor inspector, points out that penalties cannot be intensified without amending the law, yet he believes that the priority should be on achieving mandatory digital records accessible to inspectors, addressing issues such as unpaid and unrecorded work hours.

The existing system for recording work hours is perceived as easily manipulatable and susceptible to falsification.

However, some inspectors express skepticism about the feasibility of achieving digitalization and interoperability under a purely regulatory framework, as current provisions in Article 34 of the Workers' Statute do not specify the required recording methods.

One inspector, who wished to remain anonymous, indicated that without legal modification, both digital and paper records are permitted.

She argues that regulatory measures cannot negate what is allowed by law.

“What cannot be developed through regulations must be legally mandated,” she asserts, referencing judicial rulings in favor of companies that utilize paper-based records.

Despite these concerns, Deputy Prime Minister Díaz has reiterated her commitment to the reduction of working hours but admitted uncertainty regarding the timeline for implementation.

Strengthening inspection capabilities was noted as a significant area of focus among inspectors, who believe that an interoperable time record system would streamline their operations amidst the current staffing shortages.

According to the latest annual report, the inspectorate's workforce in 2023 comprised 1,041 inspectors, reflecting a 4.1% increase since 2019. However, the rapid increase in employment over the same period (7.1%) raises concerns about insufficient resources relative to regulatory demands.

In 2023, the ratio of inspectors to workers stood at one inspector for every 20,348 workers, a stark contrast to the International Labour Organization's recommended ratio of one inspector for every 7,500 workers.

Notwithstanding these challenges, the ministry has recently appointed 108 new inspectors who are expected to join within the month, signaling a gradual effort to enhance inspectorate capabilities.

In 2023, labor inspectors conducted 8,355 inspections focused on adherence to work hour recording, resulting in 1,660 penalties amounting to €3.07 million.

While this represents a 17.2% increase in activities compared to the previous year, it highlights the significant gap in effective oversight of the approximately 1.5 million companies with employees in Spain.