* Weighing on general election due November (Updates with latest unemployment data for Q2)
By Sarah White
MADRID, July 23 (Reuters) - Eric Martin, a freelance property agent, also drives trucks and sometimes moonlights as a football referee. After more than 10 years of odd jobs, he has still not landed the one thing he really wants - a permanent contract, in any position.
The 31-year-old Spaniard, who has worked as a lifeguard, store assistant and postman, says he cannot provide properly for his growing family as long as he does only temporary jobs.
"It's not giving me the security my family needs," says Martin, whose wife is expecting their second child.
As Spain emerges from a deep downturn, short-term job contracts like Martin's are helping to chip away at an unemployment rate that is falling but still affects 22.4 percent of the workforce, second only to Greece's in Europe.
But they are accentuating a two-tier labour market that during Spain's recent double-dip recession left temporary workers in the firing line, regardless of their performance at work. Most of the three million jobs lost over the past seven years were held by these short-term contract workers, many of whom were in their twenties and thirties.
This generation has been unable to get loans to buy a home, or start families and advance careers in what economists predict will hold back the Spanish economy for years.
Numbers of temporary workers have grown steadily over the past three decades. Short-term contracts account for a quarter of all positions. That's less than before the downturn, but far more than anywhere else in the euro zone.
These jobs are now proliferating at a much faster rate than others, and especially so during the tourist season. Temporary positions were up 8 percent year-on-year in the second quarter helped by hiring in coastal areas, while permanent contracts rose 1.6 percent.
For centre-right Prime Minister Mariano Rajoy, a job recovery based on part-time contracts is a mixed blessing, as his government trumpets its handling of Spain's economic recovery before elections at the end of this year.
The government says 600,000 jobs will be created this year, the biggest annual employment jump since 2005. Spanish national economic output should rise by more than three percent this year, more than in most other European countries.
Yet this is not translating into better living standards for many Spaniards, partly because of their precarious employment conditions. According to official data, temporary workers made an average of 15,433 euros ($16,826) in 2013, 36 percent less than permanent employees.
As a result, many voters are turning from Rajoy's Popular Party to new parties such as the leftist Podemos and centrist Ciudadanos, which have already done well in local elections.
Martin, who lives in Madrid, says he makes 400 euros a month from his property agent work while his income from the other odd jobs is uneven. The family makes ends meet thanks to his wife's permanent contract as a postal worker. But Martin got a mortgage only because his parents provided guarantees for the bank.
"What am I supposed to live off, air?" Martin said.
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The government acknowledges the dual labour market is a problem. It says a 2012 overhaul of labour laws will eventually lead to more temporary jobs becoming permanent. That's because, according to the overhaul, long-term workers will become cheaper to fire, lessening the incentives for employers to hire short-term staff who up until now have been easier to lay off.
Critics, however, point to decades of abuse of temporary contracts by employers.
Such contracts began to be used shortly after Spain emerged from dictatorship in the 1970s. Under the Franco regime, most jobs were on cradle-to-grave contracts in state monopolies. A Socialist government in the 1980s introduced temporary contracts as a way to shake up the system.
These increasingly became the norm for new hires, largely because they gave employers more flexibility even during an economic boom in the 1990s.
"Various labour reforms have tried to restrict the usage of temporary contracts, and all have failed," said Jose Ignacio Conde-Ruiz, an economy professor at the Complutense University in Madrid.
Conde-Ruiz said Spain should introduce a one-contract-fits-all system that would give permanent contracts to everyone, while giving employers the flexibility to cut their workforce when needed. He said temporary contracts should be introduced only in rare cases, such as for very finite projects.
Such a scheme has been floated by the European Commission as well, and is one of the platform promises of Ciudadanos. However, it would lessen the protection of permanent contracts, a politically explosive proposition.
For now, stop-gap jobs may be better than none at all, many say.
David Barcena, 25, is grateful to have work as an ice-cream seller for four months, after struggling to find anything for most of this year. Barcena has been employed on and off since 2012, when he lost his job at an electricity plant.
Now he works for Unilever company Frigo, which hired 500 students or unemployed young Spaniards to run their own ice-cream stalls this summer. Some may be hired for longer.
"If I had money, I would set up a company of my own," said Barcena, who rides his vending tricycle around a busy shopping complex on the outskirts of Madrid. Barcena, like others, dreams for a permanent contract, however.
"I can't complain, because I've been working," said Barcena. "But I can't leave my parents' place and I can't get a loan." ($1 = 0.9172 euros) (Reporting by Sarah White, editing by Alessandra Galloni and David Stamp)
