Spain’s addiction to temporary work is, says his government, making the country a “distant planet” from the rest of the EU.
About a quarter of the labor force relies on such employment contracts, far more than in any other Member State. Young people and women are mainly affected.
When Yolanda Díaz, the country’s communist deputy prime minister, thus reached a long-sought agree with business and unions over labor rules last month – focusing on measures to curb the use of temporary contracts – the government was not alone in welcoming the breakthrough on an extremely controversial and consequential issue.
“On a symbolic level, we have hardly seen anything like it since the transition to democracy: a communist minister has reached an agreement with business and labor,” said Máriam Martínez-Bascuñán, a political scientist at the Autonomous University of Madrid , said.
Now comes the difficult part: getting parliament to implement the measure in law and make real improvements to Spain’s dysfunctional labor market.
The changes – a component of the reforms Spain has promised in exchange for € 70 billion in grants from the EU’s coronavirus recovery fund – to be backed by parliament by February 7. Failure to ratify the reforms could affect future funds from Brussels.
But so far the votes are not there. The opposition People’s Party says it will oppose the measure, which has already taken effect for the time being, while the nationalist and regional parties on which the left-wing minority government depends have not yet been won.
Meanwhile, the real challenge awaits: the recovery of Spain’s labor market, the country’s largest economic black spot. At twice the EU average, Spain’s 14 percent unemployment rate is the highest in the bloc.
“The situation in parliament shows where Spain is now,” Martínez-Bascuñán said. “The far right is on the rise, so the PP will not support the reform for fear that it will look too centric and the bloc that supports the government remains fragile even though it has pushed through a lot of legislation.”
The reform’s roots lie in the coalition agreement between the Socialists and Díaz’s smaller, radical left-wing Podemos grouping two years ago. The parties agreed to scrap changes introduced by the Conservative government in 2012, which reduced redundancy payments and gave preference to company-specific wage and terms negotiations, rather than sector-wide negotiations.
Many economists say the 2012 measures helped businesses bounce back from the financial crisis, which allowed for an export-led recovery, but the left argues that it exacerbated economic inequalities.
For years, the coalition partners Fed on how to rewrite the rules, with the Socialists wanting to keep business aside. Spain’s central bank encouraged the government to maintain the measures to avoid harm to the country’s competitiveness.
During the pandemic, the planned changes to labor rules were included in the recovery agenda agreed with the EU. Because Brussels demanded that the changes be negotiated with business and labor organizations, the CEOs, Spain’s employers’ federation, played a crucial role in the talks. He joined the reform last month, despite disagreements in his ranks from groups such as car manufacturers, the agricultural industry and business organizations of Madrid and Catalonia, the country’s main economic power stations.
The CEOs’ leadership says the agreement “consolidates the current labor model”. The agreement sets limits temporary contracts, of which 17 million were closed last year, compared to just 2 million fixed-term contracts. But it allows its use for training, temporary replacements and work up to less than 90 days.
The CEOs add that while sector-wide talks will now set wage agreements with unions, negotiations on terms, which he considers more important, will remain business-specific.
Mariano Rajoy, Spain’s former Conservative prime minister, came up with a simpler analysis and told the ABC newspaper the government treaty had “the [previous] labor reform where it was ”.
But the current leadership of the PP has indicated that they will vote against any changes to measures that he says have brought millions of jobs to Spain over the past decade.
The government also portrays the changes as a paradigm shift. “The previous model was based on uncertainty and wage precision,” an official said. “This reform will restore workers’ rights without harming business.”
Officials express confidence that they will receive enough support from Spain’s smaller parties to implement the measures in legislation. But they are reluctant to reopen a long-negotiated text that has already been ticked off Spain’s list of commitments to the EU.
“It is true that this measure to a large extent maintains the PP’s labor reform, while focusing on reducing temporary contracts, which if it works will be very positive,” says Alicia Coronil, chief economist at Singular Bank, a Madrid -based private bank. .
Coronil said the 2012 reform helped Spain add half a million jobs a year before the pandemic and likely reduced job losses as a result.
But she said the pandemic “also showed how exposed the Spanish economy is – with companies often too small to expand and employment policies inadequate. The most important thing is to address those issues.”