Spain’s new conservative government, led by Mariano Rajoy, have approved desperately needed labor market reforms as part of a drive to revive a failing economy and solve Europe’s worst unemployment rate of nearly 23 percent.
The plans are designed to encourage companies to hire more people by simplifying the hiring and firing procedures and offering tax breaks for employing young people.
However, the fast-track approval of the reforms resulted in violent clashes between riot police and protesters who say they will lose worker benefits.
Spain’s largest union is now calling for mass protests across the country on Feb. 19 in response to the changes.
“We want to raise a clamor in the streets of Spain against the labor-market reforms,” said Sr Toxo, although he stopped short of calling for a general strike.
He added that the reforms “limit the rights of workers but offer no benefits for the people.”
The decree will reduce the cost of an unfair dismissal associated with an open-ended contract to 33 days a year worked, down from 45. More importantly, it will make it easier for employers to justify a fair dismissal with a cost of 20 days. Some economists and business leaders say the high costs associated with dismissal can act as a disincentive to hiring.
Under the new reforms, companies will be able to pull out of collective bargaining agreements and have greater flexibility to adjust an employee’s working hours, tasks and wages depending on how the economy and the company are doing.
Severance packages will also be cut from 45 days of severance pay per year worked to 33 days.
Nearly a third of workers in Spain are on temporary contracts, a huge percentage that makes the country’s jobless rate so volatile. From January 1st, 2013, temporary contracts must become permanent after 24 months. Zapatero’s Socialist government had introduced reforms in 2010 that allowed temporary contracts to run indefinitely.
Taking people off benefits will also provide employers with incentives under the new laws by paying the employer 50% of the unemployment benefit while the employee will continue to claim 25%.
This is sold as a 25% saving for the government. How? Usually when someone gets a job they come off benefits so how is this going to save money? You get a job and continue to receive benefits – surely that’s spending more, not less.
One protester, Cristina Fernandez, waved a placard saying “Every cut mutilates my rights” and said the labor reforms won’t achieve the government’s goals in reducing unemployment.
“To reduce unemployment, you need to create jobs, not simplify firing,” she added.
It seems to me that there is nothing in the reforms for me, and the rest of the workers that keep Spain alive. Only the companies that choose to treat employees like numbers seem to be gaining anything here. They can dump you cheaper and easier than before. This will do nothing to reduce the unemployment level in Spain. If anything, it will increase the numbers as it’s almost certain that many people who were in secure positions before will now become victims of the new “easier-to-justify-and-cheaper-dismissal” laws.