MADRID – Spanish prime minister José Luís Rodriguez Zapatero pledged “substantial” changes to labour laws that have been pending for two decades as his minority government seeks parliamentary support for the overhaul.
After talks between unions and employers broke down without a deal, following an all-night session, Mr Zapatero plans to legislate by decree on June 16th.
Decrees have to be ratified in parliament, where Mr Zapatero is seven votes short of a majority.
“We want to reduce the costs of firing, without workers losing rights,” Mr Zapatero told reporters in Rome yesterday. The government aims to give companies more flexibility and address wage bargaining procedures, he said. “This reform has been awaited for perhaps two decades as our labour model has barely changed in the last 25 years,” said Mr Zapatero, who described Spain’s 20 per cent unemployment rate, the highest in the euro region, as a “historic ailment”.
Spain has a jobless rate of more than 40 per cent among young people and both the International Monetary Fund and European Central Bank have called for changes to its labour laws.
Mr Zapatero, a union member who leads a Socialist government, risks not being able to gather enough support for the overhaul in parliament if the decree isn’t backed by unions and employers.
“You have very little margin for error,” Josep Sanchez Llibre, the economic spokesman for Catalan party CiU, told finance minister Elena Salgado in a parliamentary debate in Madrid. CiU, whose votes would be enough to give Mr Zapatero a majority in parliament, has said it may support the government on the labour overhaul if it is rigorous enough.
Mr Zapatero pushed austerity measures through parliament on May 27th with a margin of one vote, as smaller parties that had previously voted with him turned against him. He said he’s “confident” parliament will pass a revamped labour law. Spain has some of the highest firing costs for open-ended contracts in Europe, according to the World Bank’s Doing Business Index, while about a quarter of workers have temporary contracts.
Workers fired from open-ended contracts receive 45 days of compensation for each year worked, compared with eight days for temporary workers. A third contract gives 33 days of compensation and is aimed at promoting employment among most groups, except men aged 31 to 45. Labour minister Celestino Corbacho said the government wants to make the third contract more “attractive” while increasing protection for temporary workers.
The government may take up part of the cost of firing, reducing the burden on companies while leaving workers’ compensation intact, La Vanguardia newspaper reported. Mr Zapatero’s hand may have been strengthened by low participation at a public-sector strike on Tuesday. Just 12 per cent of public workers followed the walkout, the government said. The unions Comisiones Obreras and UGT put the figure at 75 per cent. Comisiones Obreras may call a general strike if workers’ rights are harmed, secretary general Ignacio Fernandez Toxo said earlier this week. – (Bloomberg)