From the TUC

Unions and employers agree to protect jobs as Spanish unemployment tops 5 million

28 Jan 2012, by in International

Spain is yet another country where austerity isn’t working. At the end of 2011, the number of unemployed in Spain had leapt to 23% or five and a quarter million (2.3 million of them out of work for over a year). 62% of the jobs lost in the last quarter of the year were young people’s, and the unemployment rate among 16-24 year olds is now a staggering 48%. The new right-wing Government has accelerated the previous socialist administration’s budget cuts: rising unemployment is the inevitable result. Meanwhile, the European Commission and politicians like Germany’s Angela Merkel blame Spanish youth unemployment rates on the strength of workers’ rights in the country, although temporary employment is also falling. Spanish union confederation leader Ignacio Toxo – also President of the ETUC – asked “Has Chancellor Merkel actually read the Spanish labour law?”

Toxo’s union confederation, CCOO, has reiterated the need to address finance sector reforms and a determined fight against fraud. This would provide credit to households and SMEs and increase state revenues which could deliver an adequate level of public investment and quality public services, and thus contribute to economic recovery. At European level, the CCOO and UGT – the other main Spanish union confederation – have urged the European Council meeting starting shortly to promote a European plan to boost economic growth and employment, increase the time limits for compliance with the deficit and debt targets and approve the necessary tools to resolve the European financial crisis – such as Eurobonds.

Spanish unions have also just negotiated a Second Employment Agreement for the years 2012-2014 to avoid job losses by encouraging negotiations over flexible working to maintain employment instead of redundancy (what the unions wrily call “external flexibility”) and moderating wage demands. Unions maintain that, with this voluntary agreement, further reform as promised by the new Government is unnecessary.

On Thursday, public service employees staged a series of demonstrations across Spain to protest against unemployment and increasing austerity measures.

7 Responses to Unions and employers agree to protect jobs as Spanish unemployment tops 5 million

  1. Gareth
    Jan 30th 2012, 4:31 pm

    Yes, clearly the Spanish labour market is working just fine, thanks. We’ll ignore the fact that unemployment has been above 10% for 15 of the last 18 years. Yup, no labour market reform needed in Spain. Everything is just fine.

  2. Owen Tudor

    Owen Tudor
    Jan 30th 2012, 4:54 pm

    Gareth, (a) no one is saying all labour market reform in Spain is unnecessary, that’s why unions have just negotiated some reforms, but (b) if you look at the ILO data you cite, the Spanish unemployment rate was falling pretty much consistently between 1994 and 2007 (from 20% to 8% – over a decade of falling unemployment) and then shot up from 8% to 23% in the last four years – according to your logic, the labour market was functioning better and better every year for the first 13 years of this period, and then started functioning shockingly badly over the next 4 years. I think this is unlikely. A rather more plausible explanation is that the economy was growing for the 13 years when unemployment fell, and contracting for the four years when unemployment rose. In other words, labour market reforms (which were happening all the time during this period) seem to have NO predictive effect AT ALL (or at the very least, certainly nowhere near as predictive as growth). Now it would be fair to suggest that the growth rate from 1994 to 2007 was unsustainable, dependent as it was on a housing bubble (but not a financial one, interestingly), but had the global financial crisis not happened, Spain was on course for full employment by 2014 (I don’t believe this, but that’s what your after-the-event logic would suggest). Please note, it’s your reasoning I am challenging. There may be some other reason why labour market reform is a higher priority for Spain than boosting demand, but your argument doesn’t suggest that at all!

  3. Gareth
    Jan 30th 2012, 9:26 pm

    OK, I was too glib. Sorry. Yes, of course a recession and higher unemployment will go hand in hand.

    But those numbers scream that the Spanish labour market has major structural issues, don’t you agree? Whatever reforms they did up to 2008, they don’t look effective.

    I looked at the IMF numbers: the UK lost about 4% of output 2008-2010, and the unemployment rate went up about 2.5%.

    Spain lost about 3% of output 2007-2010 and unemployment went up 12%. TWELVE percent. Something is very, very wrong there.

  4. Owen Tudor

    Owen Tudor
    Jan 31st 2012, 11:14 am

    Thanks Gareth. The output/employment ratio in the UK and Spain is indeed interesting. But the point I was making was that unions and employers are better placed to agree what flexibility is in the interests of both the employers and the workers: Government interventions (and other Governments’ interventions probably even more so) are, I suspect, less helpful. When Governments call for “labour market reform”, that’s usually code for cutting workers’ rights, and the indications from Europe are that the countries with the strongest workers’ rights (basically, Scandinavia) have (a) most ‘real’ flexibility (ie they adapt well to change; and (b) have the best performing economies. Obviously, YOU may NOT be using “labour market reform” as code for “cutting workers’ rights”. But I hope you understand why we’re twitchy about it!

  5. Gareth
    Jan 31st 2012, 12:54 pm

    From a quick Google around, most (recent) studies of the Spanish labour market seem to be saying that the split between very strong rights for permanent workers and very weak rights for temps is one of the major problems. Mostly there is a call for some reduction of rights for permanent workers (severance pay and long fixed term contracts seems to be mentioned a lot); some improvement in rights for temps would not hurt either.

    I can’t get over how bad those numbers are, though. 23% unemployment. Shocking.

  6. Owen Tudor

    Owen Tudor
    Jan 31st 2012, 1:01 pm

    Well we can at least agree on the fact that “something must be done” about the dreadful waste of humanity that such unemployment levels (and especially the even higher youth unemployment levels) represent.

    I would still argue that it is the level of demand in the economy that is crucial though, rather than the state of labour market laws. The argument that there is too much of a difference between permanent workers’ rights and those of ‘outsiders’ is used to explain why Spain has so many people onm temporary employment contracts – but the current recession is driving both types of jobs out, which again suggests to me that you can’t tackle the levels of unemployment in Spain by labour market reform, only by growth.

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