Back to the labor market

Escrito el 6 junio 2010 por Gayle Allard en Economía española

Again, the government has pledged to do something within the next days to remove the dysfunction from Spain’s labor markets. Again, unions threaten to strike and uncertainty prevails. And nervous markets prepare to give Spain’s debt a new beating.

What does it take to get this government to see that the situation has gone ‘way too far for a simple change in the days of severance pay to change anything?

Unemployment is 20%, the debt has been downgraded twice, and analysts obsessed with the perils of the PIGs are looking for major change. At this very late stage of the game, the onnly thing that will make a difference is sweeping reform.

Anyone who has watched the agony of Spain’s labor markets play itself out once a decade knows what is needed.

1. Lower severance pay and some protection for temporary workers, so that society’s demands for security are less of a farse. One possible model: the new dismissal law before the Italian parliament, where there is a single type of contract and every worker accumulates about 20 days per year of severance pay.

2. Crystal-clear conditions for regular dismissal, so that only a tiny minority of cases have any reason to go to court.

3. An overhaul of collective bargaining and even of union financing. If their budget depended on worker contributions, they might begin to actually speak for the concerns of workers.

4. Deep and thorough reform of the unemployment benefits system, to require the jobless to undergo training in order to collect the subsidy.

5. Drastic change in training programs: many, many, many more courses, managed in cooperation with companies in a great public-private partnership to raise Spanish productivity and get 4+ million unemployed back to work.

It’s a tall order. But the work has been postponed for so long that nothing less will do.


Fernando Peral 6 junio 2010 - 13:43

I completely agree with Prof. Allard; only one remark, the overhaul of union financing should be extended to employers organizations, not only for saving purposes but, first and foremost, in order to clarify how representative these organizations are.

Fernando Peral 6 junio 2010 - 13:55

By the way, overhaulment of public financing should also be extended to that of political parties.

By the way... 6 junio 2010 - 19:24

PIGGS = Portugal, Ireland, Greece/Great Britain, SPAIN!

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