Perhaps not “historic” as the Spanish government would like it to be, but this labor market reform in Spain and the way it came about is definitely memorable: For months, Pedro Sánchez’s left-wing minority government has been trying to get a majority for its prestige structural-political project, struggling to make concessions and sends signals of confidence to Brussels. Because there, too, there is great interest in the reform being carried out without further complications. And when Sánchez finally, shortly before that day, the newspaper El País called the “D-Day of labor market reform” and believes that they have the votes to pass it in Parliament, two actually already convinced MPs decide at the last minute in favor of a no. The reform threatens to fail. But then a misunderstanding saves the government in Madrid: the labor market reform is passed with a majority of votes because a backbencher in the conservative opposition accidentally voted yes.
What a thriller. Spain needed a few days to digest these events. It was all about conspiracy theories, there was talk of manipulation of the voting results, and of course there was ridicule and malice for Alberto Casero, the unfortunate backbencher from the Partido Popular. “I’m devastated, what did I do there,” was his reaction. Sánchez and his Labor Minister Yolanda Díaz are happy – at least this government seems to have good luck.
The reform of the reform is a single compromise – but that could be its strength
With all the excitement, Spain hardly had time to deal with the content of the reform, which ended up being much smaller than the left-left coalition in Madrid had hoped. By the day of the vote in Parliament, only seven percent of Spaniards really knew about the planned measures. The project is directly linked to the EU aid and thus also to the country’s economic recovery: Brussels had called on Spain to carry out a “comprehensive and ambitious” reform of its labor market, one that “seriously” primarily affects youth unemployment and the high rate on fixed-term contracts. Spain has been setting negative records in both areas for years.
In addition to new regulations for time limits, which massively restrict them, Madrid is now strengthening forms of dual training as known from Germany and making it more difficult to circumvent collective agreements by outsourcing to subcontractors. The short-time work tested during the pandemic will be retained as an option for ailing companies. In addition, there is an increase in the minimum wage from 965 to 1000 euros per month, which is paid out in 14 monthly salaries. In an EU comparison, Spain is thus moving somewhat closer to France, leaving neighboring Portugal, which has just increased its minimum wage to 705 euros, far behind.
The question now is: is this little reform sufficient to meet the conditions from Brussels? The economist Miguel Ángel Malo from the University of Salamanca thinks the government’s credit for negotiating the reform together with business associations and trade unions. This resulted in a compromise that doesn’t really make either side happy, but the new regulations could now be effective in the long term, says Malo.
Yolanda Díaz, Spain’s communist labor minister, is already seeing the first effects of the law, which came into force on December 31 but has only now been confirmed by Congress: a record number of almost 240,000 permanent contracts were signed in January. Combating the exploitation of workers through chain contracts is one of the minister’s declared goals. However, you calculate the newspaper El Mundo now suggests that these 240,000 permanent contracts from January are offset by 1.35 million fixed-term contracts that were concluded in the same period. Because the new law grants entrepreneurs a transitional rule until the end of March.
On construction sites and in hospitals, employees are often only hired for a few hours
After this period, experts expect that thanks to the reform, the proportion of temporary workers in Spain will fall by at least two percentage points, from 25 to 23 percent. Some economists even expect a drop to as much as 17 percent. The construction industry is particularly affected, where so-called work contracts are common. The government is now abolishing this. Time limits are only possible if there is a structural need or as substitute positions, for example for employees on parental leave. In fact, the construction industry already seems to be on the move: In January, 62 percent of the employees were already permanent, says José María Duelo from the Seopan industry association, in October it was 54 percent.
“The nurses can’t take it anymore”: Medical staff at a hospital in Madrid are demanding a pay rise and better working conditions.
(Photo: Manu Fernandez/dpa)
But not only in construction, many employees are only employed for a short time in Spain’s hospitals. 38-year-old nurse Alba Rodríguez told Spanish radio that she had had 404 employment contracts over the course of her professional life. Of these, 270 contracts were limited to one day or even a few hours. The situation is similar in the public and private healthcare sectors, the pandemic has not changed that. On the contrary: as soon as a violent wave of infection with many hospital admissions was over, many clinics put their nursing staff back on the street – only to hire them again for the next wave.
80 percent of young Spaniards feel abandoned by the state
Labor Minister Díaz says her concern is working with dignity and fighting unemployment. The reform, which Díaz has now partially reversed, once had the same goal: to combat unemployment and get Spain out of the crisis. The Prime Minister at the time, Mariano Rajoy, pushed through the reform to liberalize the labor market in 2012, and even then the ruling Socialists were up in arms against the law. Many critics believe that they have now missed the opportunity to really change something about the reform. The Catalan left-wing republicans describe the reform of the reform as mere “retouching”. After Brussels, there was cautious communication from Madrid that the main thing was a “revision of the imbalances”.
The rate of fixed-term contracts could now actually decrease. But what about the second task, reducing youth unemployment? For the first time in 13 years, the unemployment rate among under-25s fell below 30 percent this winter. But even with 29.2 percent, Spain still brings up the rear in the EU after Greece. The economic consequences of the corona pandemic have hit this generation particularly hard: 53 percent of Spaniards under the age of 35 lost their jobs at the beginning of the pandemic. It’s hardly surprising that 80 percent of young Spaniards say they feel let down by the state.