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Labour market reform, Spain

Rajoy ‘legalises precarious employment’ with sweeping labour reforms

Labour reforms passed today by the right-wing government of Mariano Rajoy will ‘make it easier and cheaper to fire workers, legalise precarious employment and force the long-term unemployed into volunteering,’ according to Cayo Lara, leader of the radical United Left.

Spain’s Popular Party government announced a sweeping labour reform that included slashing employees’ maximum severance pay and watered down collective bargaining rights, strengthening the power of employers over workers.

The centre-right government said it would abolish contracts allowing severance packages of 45 days’ pay for every year worked to employees deemed to have been unfairly dismissed. Instead, employers firing staff will have to offer just 33 days’ pay per year, or 20 days if the business is facing losses over a sustained period.

It capped severance pay at the equivalent of two years’ wages, almost halving the limit from a previous 3-1/2 years and said it would allow employers to ignore wage deals negotiated across sectors in times of crisis. Such collective bargaining agreements are often linked to inflation.

The Popular Party government claims the measures will cut unemployment which has tripled since 2007 to nearly 23 percent  after a property bubble imploded, laying waste to millions of jobs in the construction sector.

Some of the toughest austerity measures in Europe carried through by the former socialist government  only lengthened the jobless queues and the new government is set to continue the disaster after announcing swinging budget cuts and tax rises in January.

The number of jobless people in Spain shot above five million at the end of 2011, sending the unemployment rate to 22.85 percent — double the European average and the highest in the industrialised world.

Lara, whose party benefited from switch in allegiance away from the socialists in the November elections and is now running at around 8% in the opinion polls, said that there was no justification, economic or otherwise for what he called one of the worse attacks on workers’ rights in the country’s history.

The reforms would mean ‘any company, even if it doesn’t have losses can now fire workers’ but he also argued that employers starting businesses weren’t concerned about how much it would cost them to fire employees, but ‘whether they could sell their products or services, carry out their activity and if they can access credit.’

The government claimed it was trying to end a ‘two-tier’ labour market that favours an older generation of workers with robust benefits who are very expensive to let go, but gives few rights to generally younger workers on temporary contracts.

‘Employers will fire more workers’ 

But Lara said the government was simply attempting to ‘pit the unemployed against the employed, as if one owed the other something; making it cheaper and easier to fire workers just means employers will fire more workers.’ This is a view shared by the socialists, and even the government admits the changes won’t lead to job creation this year.

One of the measures announced today, designed to tackle youth unemployment now at a record 48.6 percent, allows an unemployed person who finds a job to combine 25 percent of the unemployment benefit with the new salary for one year for which small and medium sized employers will get incentives.

The measure implies earning less than the minimum wage, which in Spain is 641 euros a month. These so-called ‘mini-jobs’ have been used widely in Germany and have led to a massive expansion in the low-wage sector.

In addition, long term unemployed receiving benefits will have to do socially useful voluntary work which Lara defined as ‘forced volunteering.’

Lara called on citizens to mobilise, together with unions and other campaigning organisations, in order to ‘persuade the government to step back’ from the reforms.

Nationwide protests on February 19

The measures, taken unilaterally by Madrid after a pact between unions and employers ended in deadlock.

Spain’s two biggest trade union confederations called for nationwide protests on February 19 against the ‘reforms’

“On February 19 we want the streets of Spain to be filled with noisy protests against the labour reforms,” the head of the CCOO union, Ignacio Fernandez Toxo, told a joint news conference with Candido Mendez, leader of UGT union confederation.

“We will set in motion a process of mobilisation that we hope will grow,” Toxo said.

Toxo said the reforms “attack the fundamentals of (Spain’s) model of social well-being” and aimed to “dismantle” workers’ rights.

Mendez said they  would “destroy jobs in the short term and increase job insecurity in the medium term (and) increase the frustration of people” already reeling under earlier austerity measures.

He said the reforms would impoverish the middle class, lamenting that employers will be able to fire employees more cheaply and hire young people at lower wages.

Many of the labour reform proposals originate from a letter from the European Central Bank sent to the socialist government in August last year and which Rajoy has said he would use a ‘road map’ for the Government’s policies.

United Left statement

More on Spain

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

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