Why work “reforms” in Spain are a warning for workers across Europe


by Claude Carpentieri    
11:02 am - February 20th 2012

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The Spanish trade unions have labelled it “the harshest and most aggressive employment legislation [of the post-Franco era]“.

Opposition parties are already planning to appeal to the country’s highest judicial body.

Depressing salaries, free dismissals and other gems – these are Spain’s right-wing solution to the economic crisis.

The background is that a combination of Spain’s scary unemployment rate (just under 23%, the highest in the Eurozone) and the country’s worst economic crisis in generations, handed the centre-right People’s Party a landslide victory in last November’s election.

And while everyone agreed that measures had to be taken, it now looks like the priority is simply a massive raid against workers’ rights – the same rights that didn’t stop the country from creating more than half of all the new jobs in the EU in the period 2000-2006.

Indeed, when People’s Party leader Rajoy was asked to explain his plans during the election campaign, he repeated that he would “never” attack workers’ rights or “make it cheaper to fire workers”. He even posted a Twitter message to ram the point home.

Yet, a mere 55 days later, the total opposite has happened.

This should concern workers all over Europe, because the “Rajoy method” may inspire right-wing governments and rampant “free marketeers” in other countries too.

Here are some of the reasons why:

1. Companies can now unilaterally impose a pay cut. While this is still illegal in Britain, on the grounds that it would amount to a breach of contract under the Employment Rights Act 1996, for the first time since 1889 the new Spanish law will now allow bosses to “modify” their staff’s salary without agreement.

This can be applied collectively or to specific members of staff. The new law states that this can be done simply “if there are proven economic, technical, organisational or productive reasons”, which is extremely ambiguous and is an open door to abuse.

2. Employers can unilaterally modify staff working hours or even tasks as decribed in the contract. Again, all they need to do is tell the hapless worker 15 days in advance citing the above-mentioned catch-all “economic, technical, organisational or productive reasons”. If the employee doesn’t like his new timetable, let alone new “duties and responsibilities”, all he needs to do is grab his coat and hope for the following point.

3. Firing workers is now up to 71.5% cheaper than until the other day. Admittedly, Spain had one of the most expensive payout packages in Europe (45 days per year worked up to a maximum of 3 and 1/2 years).

This was often branded the reason for the country’s endemic use of casual and temporary contracts, often the easiest way to sidestep legal restrictions. However, in one fell swoop, workers will now be entitled to 20 days per year of service, up to a maximum of one year – that is almost three quarters cheaper than it used to be.

4. Back pay is abolished. If a dismissal is deemed “unfair” by a judge, the company will only have to fork out a payout and no longer the so-called “back pay” (which is the salaries corresponding to a worker between the time he was dismissed and the time a favourable award is obtained from an employment tribunal).

5. Probationary periods are now extended to one year. That is to say, for one full year, an employee can have their contract terminated for no reason and with no right to notice or payout. Note that pregnant women too, until the other day covered by protection against “unfair dismissal”, can now be sacked absolutely free during the first 12 months.

As for employees in the UK or other EU countries, we can only hope that at least some of Rajoy’s measures are blocked by the Constitutional Court, or that their predictably depressing effect on the Spanish economy (mass salary cuts are already under way) will be enough to put off our own governments.

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About the author
Claude is a regular contributor, and blogs more regularly at: Hagley Road to Ladywood
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Story Filed Under: Blog ,Economy ,Europe ,Foreign affairs


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Reader comments


1. Frances_coppola

Er, please explain why pregnant women should be protected from dismissal in the first 12 months of a job if other workers aren’t?

And given that pregnancy lasts for 9 months, it would seem that a worker who has a baby within the first year of the job was either pregnant when she arrived (and presumably didn’t disclose that fact) or got pregnant almost immediately afterwards. I’m not opposed to pregnant women being protected from unfair dismissal, but this sounds like abuse of employment to me – in these days of easy and reliable contraception (even in a Catholic country). There has to be responsibility on both sides.

Point 2 is a mitigation against point 3. Would you rather work less (and maybe use the other time to find other work?) or just be made redundant.

Point 3 – ‘Firing’ is not the same as being made redundant. Point 3 is still 4 x more generous than in the UK today.

Point 5 – same as in the UK today.

@2 Shrugged

Point 5 isn’t the same in the UK.
a) In the UK dismissing a pregnant woman is “automatic unfair dismissal” – which is designed to protect decades of abuse of women losing their job the moment the employer would clock pregnancy.
b) in the UK, even during the probationary period, after one month the “minimum statutory notice period” applies and it’s one week at the very least.

Point 2.
Most people would rather work less than lose their job altogether.
But dont pretend you can’t see the monstrosity in action here. It is totally arbitrary on the part of the employer. There’s no cap, no 10%, 20%, or even 50% statutory limit on the salary cut. And there’s no time limit either. It’s at the total and utter discretion of the employer. The fact that this was last seen in 1889 speaks volume.

@3 Claude.

Fair enough about the detail in Point 5. It’s somewhat different from the hysteria in Claude’s piece.

re Point 2, one person’s ‘arbitary’ is another person’s economic neccessity. I’ve been made redundant twice myself, so I know that it’s no fun at all and I would have rather have had more choices. 15 days is harsh, but these are challenging times.

Scandalous!!!

Why do they not just let all the businesses go bust instead?

That would be much fairer…..

In the UK dismissing a pregnant woman is “automatic unfair dismissal” – which is designed to protect decades of abuse of women losing their job the moment the employer would clock pregnancy.

Only if the dismissal is because of the pregnancy. Pregnant women can be dismissed for standard reasons just like anybody else in the UK.

@6 Tim J

Well, companies in Spain won’t even need to pretend…

@2Shrugged

You could do with reading the OP first though, mate. These “are challenging times” no doubt, but according to the new “Reforma Rajoy” a company can slash your salary, timetable and task any time, no matter what and without agreement.

They don’t like you? From sitting at a desk they can get you to scrub the shitters for “organisational” reasons until further notice whether you like it or lump it.

All they need to do is cite “economic, technical, organisational or productive reasons”, which is as vague as it can be.

Contracts become nothing more than toilet paper, basically.

Next someone will say that child labour should be re-introduced and we’ll read comments that “yes”, it’s “tough times”. Unbelievable.

Capitalism isn’t working.

9. JustAnotherVoter

You mean those dangerous free marketeers like the UK or the US?

Where the levels of structural unemployment which sustained years of 4.5%, 5% unemployment with flexible labour markets? Yes, how horrible it must have been for the workers in the UK or US to suffer such indignity. Let us wring our hands for those people: what can we do to help them?

Or should we admire countries like Spain which has did not even manage to get unemployment below 8% after a long and sustained boom? And where unemployment can spike up dangerously and not at all in proportion to the magnitude to loss of output?

Why is Spanish unemployment at 20% and British unemployment at 8%? Tell us the reasons.

@9 JustAnotherWhatsit

You obviously know already that employment regulation means very little when it comes to dole rates. Because otherwise the Scandinavian countries or Germany should all be verging on 30% rates each. Whereas they don’t, of course, they rates are significantly lower than in the UK or US…but hey what are facts for? Let’s just recite a psalm or two from the ‘Free Market Bible’, “work harder you lazy layabout and quick when you go for that slash”, and Bob’s your uncle. Amen…

11. JustAnotherVoter

You dodged the question! Why is unemployment at 20% in Spain, Claude?

Spain has lost more than 10% of its labour market for a relatively small loss of real GDP. Why, Claude? Why, why, why? Spain is broken, and you resist change. This is the essence of Conservatism. The Labour movement should be ashamed of itself, if this is what it has come to.

Which is better: more employment rights that protect people in work or fewer employment rights to help people into work?

Employment is the sale of work in return for wages. If the value of the work is worth less than the wages then either the job is lost or the wages are cut. Which is better?

Workloads change over time due to demand. Employers can’t hire and fire workers, they can’t afford to pay them if there is no work (see above) so what is wrong with changing the number of hours worked?

Unemployment causes poverty. Work is the way out of poverty. Protecting the interests of workers over those of the unemployed is attacking poor people.

Protecting and creating jobs are what matter when times are tough, not trying to get better working conditions. It is about everybody sharing the pain rather than pushing it onto others.

Why don’t the left understand that?

@12 “what is wrong with changing the number of hours worked? “
Do you have cognitive issues or something? You are aware that that is only a tiny aspect (and also done unilaterally) out of the entire employment reform? If only it was just that! And by the way, employers were allowed to do that until the other day. The difference is that they needed authorisation -which was in place to avoid arbitrary abuses- but it was hardly “impossible”.

@11 Just Another Voter
And why has Scandinavia never any higher than 5%?
These are STRUCTURAL situations which are typical of each country? Which bit of it cant you understand? Why is Germany’s dole rate 5,5% and the UK’s 8.4% when the payout for redundancy in Germany is higher than the UK and temporary work is much more regulated than the UK? Why why why?

And that’s without counting the fact that Spain has traditionally tons of so-called “black economy” (everyone agrees that the real rate, though very high is not over 20 per cent), and that the Partodo Popular’s criminal “Ley del Suelo” from their time in power in the mid-1990s crucially channelled the country’s production towards a construction boom. And look what happened.

And all those free marketeers are not so glib when it comes to analysing what the mass drop amongst millions of salaried workers will do to consumption. Who will buy anything?

And that’s without counting the fact that Spain has traditionally tons of so-called “black economy” (everyone agrees that the real rate, though very high is not over 20 per cent)

Hmm. And why do you think there’s such high unofficial employment? Do you think maybe restrictive employment laws have something to do with it?

Indeed, when People’s Party leader Rajoy was asked to explain his plans during the election campaign, he repeated that he would “never” attack workers’ rights or “make it cheaper to fire workers”. He even posted a Twitter message to ram the point home.

To be honest, vote vermin get vermin.

Anyone voting for the Right anywhere know these people never tell the truth. I wonder how many people voted Tory in our last election and have put at the sharp end of Tory policies?

16. Maltese Cross

The Spanish Socialists failed to create jobs – at least give the Righties a chance. Speaking of which when do the Greeks get a chance to kick out their bunch of Lefties?

What choices are available to Spanish, Greek and Portuguese politicians of any party? If the model that those nations previously pursued — generous terms of employment — cannot be funded by productivity, who will pay for it?

In the Spanish case, companies who try to impose Rajoy’s terms will bash heads with trade unionists, an exercise that any observer of a Spanish TU demo will perceive as a losing position for the company. Thus we should look at Rajoy’s terms as a political position, as a bargaining point, rather than an imposition. Employment costs and conditions will fall in Spain, as they must, but not on the full terms of Rajoy. And the unions will have to give something away too.

Greece is different and EU players who pretend that Greece should not default are hurting Greek people.

18. JustAnotherVoter

The UK’s employment rate correlates very closely with output growth/loss, as you would expect in any country with a flexible labour market; I am sure that Germany and others are similar, without checking. Spain’s does not. This is the sign of a broken labour market. Very, very badly broken. In defending it, you protect the “rights” of the few against the wellbeing of the many. You will decry the “There is No Alternative” of Osborne et al, you it is truly this line of argument which embraces Conservative TINA. The status quo must be maintained!

“has traditionally tons of so-called “black economy””

Jesus Christ. Ambassador, with these arguments you are embarrassing yourself.

@16

Speaking of which when do the Greeks get a chance to kick out their bunch of Lefties?

They don’t, it’s already been done for them. The last set came dangerously close to letting the people decide something relevant, which is of course the main condition for scrapping democracy. They’ll have to make do with the combo of technocrats and fascists they’ve had foisted on them instead.
http://exiledonline.com/austerity-fascism-in-greece-the-real-1-doctrine/

20. So Much For Subtlety

Depressing salaries, free dismissals and other gems – these are Spain’s right-wing solution to the economic crisis.

What other solution is there? That is a serious question. Spanish Labour is grossly over-priced. Their unemployment rate is among the highest in Europe if not the world. What other solution is there?

And while everyone agreed that measures had to be taken, it now looks like the priority is simply a massive raid against workers’ rights – the same rights that didn’t stop the country from creating more than half of all the new jobs in the EU in the period 2000-2006.

So I followed that link and found this:

“Spain took in an extra 650,000 foreign immigrants last year, mostly from Latin America although Britons heading for a life in the sun also accounted for a significant proportion.

Booming Spain has been Europe’s largest absorber of migrants for the past six years, with its immigrant population increasing fourfold as 2.8 million people have arrived.

….

The new arrivals have mostly been absorbed into Spain’s growing economy, although many have joined the plentiful supply of illegal, underpaid labour. ”

So there’s the answer – they imported cheap Third World Labour who worked in the informal sector where these laws and the prevailing wages did not apply. That is why Spain can have such high immigration and yet high unemployment. The Spanish have legislated themselves out of work.

So there you go, labour market flexibility created jobs for some 3.8 million Latin American immigrants while these laws kept about 4 million Spanish workers out of work. How is abolishing these stupid laws not a sensible response?

2. Employers can unilaterally modify staff working hours or even tasks as decribed in the contract. Again, all they need to do is tell the hapless worker 15 days in advance citing the above-mentioned catch-all “economic, technical, organisational or productive reasons”.

I am amazed they can’t already. This is really something you want to be defending? If a company loses a contract and it has no work, you really think they need to go on paying everyone the same as before for the same hours even though there is nothing for them to do?

21. So Much For Subtlety

3. claude

a) In the UK dismissing a pregnant woman is “automatic unfair dismissal” – which is designed to protect decades of abuse of women losing their job the moment the employer would clock pregnancy.

Why is that an abuse precisely?

But dont pretend you can’t see the monstrosity in action here. It is totally arbitrary on the part of the employer. There’s no cap, no 10%, 20%, or even 50% statutory limit on the salary cut. And there’s no time limit either. It’s at the total and utter discretion of the employer. The fact that this was last seen in 1889 speaks volumes.

Why is that monstrous? You have two consenting adults who agree to do some mutually beneficial actions. When one party changes her mind and no longer consents, why should she be forced to continue to do what she doesn’t want to? Why can’t she offer to re-negotiate the terms under which she would be willing to continue to have such actions performed?

Spain has a problem. The country is bankrupt. Their banks are about to fall over. This is not the time for burdening Spain’s nearly non-existent manufacturing sector even further. Changes to these laws are sensible.

How cheeky those Spanish workers going as far as expecting their contracts to be respected, eh??

How dare they?

What next…will they even wail that they want some money for the work they put in??? Don’t they know there’s a crisis?

claude: “You obviously know already that employment regulation means very little when it comes to dole rates. Because otherwise the Scandinavian countries or Germany should all be verging on 30% rates each. ”

Your mistake here is to assume that Scandinavian countries have much less economic freedom than Britain or US. That is not the case. There is of course plenty of regulation in Scandinavian countries, but overall, companies there have a lot of freedom, particularly in the way how easy it is to make people redundant “if there are proven economic, technical, organisational or productive reasons”. Spain, Italy, Greece are the places where regulation is difficult, laws complex, company liabilities huge.

Regarding the differences between US/UK and Scandinavia, I would say that in the US, for instance, it is very easy to get rid of one poorly performing employee, but difficult to get rid of a larger group of people, such as when shutting down a manufacturing or other site, without exposing yourself to legal suits. In Scandinavia, on the other hand, it is not easy to fire a poorly performing individual, but closing down a factory has a due process which is not that complex and is done routinely. Fortunately this also means that the risk you take when starting up an operation is smaller: if you know you can back out without ruining yourself, it’s easier to take that step ahead and invest.

Also, what really matters is that even though taxation is a bit higher in Scandinavia, the bureaucracy is rather efficient and non-corrupt. Everyone still complains, of course – this is just comparative. The legislational environment in Greece is famously sclerotic and Italy and Spain are a bit similar.

SMFS, talking about employers summarily sacking women on hearing of pregnancy: “Why is that an abuse precisely?”

Are you 200 years old or something? Ludicrous.

25. So Much For Subtlety

24. jungle

Are you 200 years old or something? Ludicrous.

Something like that. Do you actually have an argument against this?


Reactions: Twitter, blogs
  1. Liberal Conspiracy

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  2. Emanuel Stoakes

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  3. David Griffiths

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  13. Noxi

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  14. andy

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  15. Molly

    Stringent work reforms being introduced in Spain. Let's hope they don't inspire anyone else. http://t.co/y2XV4FlJ

  16. Owen Blacker

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  17. John D Clare

    Coming soon to a country near you: http://t.co/p62tXiX2 = why we must resist calls to 'cut red tape' on businesses – this is what they want

  18. Christina Purcell

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  25. Rabih Chaaban

    Spain's proposed changes to working conditions – A disgrace – http://t.co/3M8ymjJz

  26. Mark Carrigan

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