How will Spain’s new labour "reform" — announced on February 10 by employment and social security minister Fátima Báñez and already in force as a royal decree before adoption by parliament—affect Spain’s workers and unemployed?
First, imagine the essence of 30 years of Australian anti-worker and anti-union law — from Hawke’s Accord through Keating’s enterprise bargaining and Howard’s Workplace Relations Act to Work Choices and the Fair Work Act — but all rolled into one bill.
In Spain the industry-wide collective agreement (award) has been the norm since the adoption in 1980 of the Workers Statute. Employer groups have battled in vain to introduce enterprise bargaining and individual agreements.
In true “shock doctrine” style, the new decree cuts through this knot by giving the right to any firm to change the conditions of an employment contract if its income falls for three quarters in a row: there is no appeal to the courts. El Pais said that’s one-third of the companies listed on the Mardid stock exchange.
Also, a company that is not suffering declining income can seek a compulsory ruling that an industry agreement no longer applies.
These measures enable employers to exploit the recession to reduce wages, downgrade working conditions and sack workers — effectively replacing industry agreements with enterprise and individual “agreements”.
The “problem” of Spain’s dual (formal and semi-formal) labour market is thus “solved” by reducing the more organised workers’ powers of self-defence.
For the forthright José Ramón Pin of the IESE business school that’s good news: “The average salary will go down. That will improve competitiveness and the chances of exporting, eventually creating more jobs.”
The law also:
1. Makes sacking cheaper and easier. Before the “reform” a worker in a permanent job who suffered unfair dismissal was entitled to 45 days’ pay for every year of service up to a maximum of three-and-a-half years pay. That has now been reduced to 33 day’s pay for every year of service up to a maximum of two years.
The fine print of the text of the reform supports a single payment of 20 days’ pay. The grounds for appealing against wrongful dismissal have been reduced, so that sacking for sickness and absenteeism becomes easier. Mass layoffs, which previously had to be authorised by the courts, can now take place without legal sanction.
2. Aims to entrench enterprise bargaining and casualisation. From now on, the workplace agreement takes precedence over industry-wide agreements. A new model of individual or workplace agreement, available to 95% of companies, allows sacking without compensation during the first year of employment.
3. Puts young people into “minijobs”. The law also creates new youth training contracts that young people will be required to take up irrespective of their previous educational choices and achievements. It modifies the model part-time work contract to allow overtime, and justifies this in the name of advancing “work-life” balance for families. This is an invitation to employer fraud in Spain’s large “informal” sector.
4. Undermines public sector working conditions and employment. Positions presently worked by full-time workers will be opened to unemployed workers receiving the unemployment benefit. The law also looks to apply the grounds for dismissal adopted for the private sector in the public sector.
5. Discriminates between the unemployed. In Spain, where unemployment benefits run out after two years, the unemployed are divided into those on benefits and those getting nothing from the public purse. The new law assumes a situation where employers will be encouraged to offer subsidies to take on workers still receiving unemployment benefits for a couple of hours a week, thus opening the way to these workers being counted as employed.