If not the single contract, what then?

Spain single contract

Spanish minister for Employment Fátima Báñez sort of rushed to dismiss the ‘single contract‘ proposed by European Commissioner Laszlo Andor because it would be, she said, contrary to the Constitution. Andor had earlier this week suggested that it could replace the existing 40 different hiring models currently set up in Spain–of which just about six are largely in use, in reality.

The minister’s argument is certainly a tough retort. Yet, it might be true that the application of the single contract would be difficult since the labour market in Spain isn’t ready. The Workers’ Statute is too rigid, as it is the legal framework that supports it. Labour unions have proved to be extremely conservative, and government and companies’ organisations fear a social backlash that would spark conflicts in an already heated atmosphere. The EU Commissioner, in fact, has politely recoiled after Madrid reacted so negatively. Case closed. Or is it?

Not exactly. What matters is that there still are almost five million jobless workers in Spain, a situation unlikely to improve in the short or medium term. Other statistics–EPA–point at some six million.

True enough, the single contract would hit some of the rights workers have gained in the last couple of centuries. Those recently hired, if fired, would lose most of their compensation and it would only rise progressively as they keep their position throughout the years.

It’s hard to guess what would be the social response, though. The mood is sombre and mobilisation in one direction or the other seems a far-fetched outcome in a country with more than half its young people without employment and with a grave lack of ideas. One thing is sure: the solution is not to be found in the current complex, over-bureaucratic contract system, or among those privileged classes who enjoy prerogatives that the public system cannot afford and whose stupendous retributions come from taxpayers’ pockets.

We know the labour market does not work–we also know health services and the education system need reform–but nobody has appetite for an alternative. The proposal made by the EU Commissioner might not be the right one, but the aggressive rejection it has met from right and left is a disservice to the Spanish economy.

* Read the original editorial article in Spanish here.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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