SPAIN’S LABOUR minister Valeriano Gomez was joined by the leaders of UGT and CC.OO unions, and employer organisation presidents in marathon negotiation sessions this week to reach an agreement to boost the economy and fight unemployment.
The “grand social pact” comes on the heels of last week’s decision to raise the compulsory retirement age from 65 to 67, making it the highest in Europe.
The unemployment figures published last week made alarming reading. They showed that Spain’s jobless rates in the last quarter of last year had risen to 4.7 million (more than 20 per cent of the population, compared with 10 per cent in the rest of Europe), with an estimated 1.3 million families with no wage earner.
Particularly badly hit by unemployment are younger Spaniards, many of whom are highly educated but cannot find jobs and are beginning to look abroad for work. It is estimated that 1.5 million of the unemployed are under 30 – 42 per cent are under 25, double the euro zone average.
The social pact will give incentives to businesses taking on younger workers, as well as long-term unemployed and those aged over 45.
Unemployment payments are dependent on the amount contributed to social security, and many of the long-term unemployed are no longer eligible to collect their payments. Under the agreement, they will receive a monthly grant of just over €400.
There will be generous reductions in social security payments during the first year for new contracts of a minimum of six months, a full exemption in payments by companies employing fewer than 250 workers and a 75 per cent reduction for those with over 250.
Other sectors to be included in the agreement are expected to be ironed out later this week. They include guidelines for collective wage bargaining, research and development and the energy market.
Deputy vice president Arturo Perez Rubalcaba yesterday welcomed the agreement. He praised the unions and employers for their responsible behaviour in accepting and confronting the situation.
“The instruments we are introducing will be much more effective when they are being shared by employers and unions,” he said.
Spain is fighting to boost its troubled economy and avoid the need for a rescue similar to those in Ireland and Greece. Economy minister Elena Salgado described the pact as “excellent news” which should make a European bailout unnecessary.
She warned in a radio interview yesterday that unemployment levels would not come down in the immediate future. “Unemployment figures are not going to be good during the first three months [of this year] and will not get any better,” she said. “In the second semester of the year, we should begin to see an improvement.”
Another welcome for the pact came from ratings agency Standard and Poor’s, which yesterday said it would maintain Spain’s long- and short-term ratings at AA and A-1+ thanks to recent structural reforms. It warned though that the economy remained vulnerable to external financial conditions.