NEW YORK, LONDON | If one of the intentions of the Spanish labour reform announced this Friday was to create headlines –like Mario Monti’s Salva Italia plan did– and calm the international money markets assuring that Spain was on the right track to make labour market more flexible, it miserably failed.
Last Friday, when the ‘very aggressive’ labour revamp was announced, the major business networks, the ones that money makers in Wall Street pay attention to (CNBC, Bloomberg TV), were focusing on other issues. From Europe, all they have heard has been about the Eurogroup asking Greece for more commitment.
Something similar has happened in the major business newspapers online.
The overhaul of Spanish labour market didn’t make it to the main news on The Wall Street Journal website, and only appeared in the Europe business news section. Under the headline “Spain Lowers Cost for Firing Workers in Key Labor Overhaul” , the WSJ highlights that:
“Spain’s government will lower the country’s high dismissal cost as part of a crucial overhaul of rigid labour laws meant to lower its towering unemployment rate and spur economic growth.” The News Corporation’s newspaper adds: “More importantly, it will make it easier for companies to justify a fair dismissal with a cost of 20 days.”
The New York Times business section devotes a longer article describing the law. It includes quotes of an interview with Luis Garicano, professor at the London School of Economics, describing the changes as
“promising,” while lamenting the fact that “the government did not go further in removing the distinction between temporary and permanent workers by establishing a single contract.”
Some other newspapers include the information provided by the main English language news agencies Reuters and Associated Press (AP). AP highlights that Mariano Rajoy’s government
“slashes severance pay in labour reform”, and points out that this is “the third major reform in two weeks by a government racing to find an antidote to Spain’s deepening economic malaise.”
Under a similar headline, Reuters affirms that
“Labor reform is seen as key to Spain’s efforts to persuade markets it is able to slash its budget deficit and boost the competitiveness of its fragile economy.”
Yet, not being exactly under the light spot of the international financial media might be reassuring news after long months in which every shadow of economic decline sent Spain in to doom-and-gloom front pages, writes Victor Jimenez from London.
Although BBC’s World Business Report on Saturday morning mentioned the contained protests staged in the streets of Madrid last night and the harsh response given by the police, UK newspapers decided to report in brief the changes announced by Mr Rajoy’s cabinet.
The widely read in the City Daily Telegraph‘s economic section seemed to register the natural course of Spain’s efforts to reign in the deficit and boost activity:
“Prime Minister Mariano Rajoy acknowledged this week that Spain’s unemployment rate will go up this year, and has said labour market reforms could lead to a general strike.
“Spain has already introduced sweeping reforms that include a €15bn package of deficit-reduction measures and a plan to force banks to set aside €50bn more in provisions to cover their exposure to its ailing housing market.”
And the Financial Times added some accurate description of the challenge:
“The reform of Spain’s complicated and antiquated labour laws, some of which were left unchanged from the Franco period, has become one of the centrepiece programmes of the recently elected conservative Popular Party government as it struggles to stem rising unemployment.”