Experts Not Convinced By Spain’s Labour Reform

It has been said the Spanish labor reform has been crucial in terms of wages restraint and that it has prevented further job losses. The Bank of Spain has also joined those who consider the reform has been key to the moderation of wages, but there is no empirical evidence of that. Are they lowering salaries because of the reform, or rather as a result of the recession itself? Is such reduction due to legal amendments or many workers are accepting cuts for fear of losing their jobs?

The Ministry of Labour should be answering to these questions instead of repeating again and again that the labor reform has avoided more jobs losses.

The European Commission has again criticized Spain for its unbearable unemployment rate: nearly six million people, 25.9% of the active population. Comparisons are odious, but the United Kingdom also unveiled on Wednesday its unemployment rate fell a tenth between June and September down to 7.6%.

The big risk is complacency. 2013 will finish with a level of unemployment higher than the last year’s, but it is quite possible that, despite not implementing new structural reforms, unemployment will decrease in 2014. And it will not be thanks to the labor reform, but rather to the fall of the active population, although the government will make sure to say otherwise.

The aim should be to create productive employment, although there will always be people who will stick to plain figures to get some credit for something that is only due to demographics.

The solution? To think more about the long term and ask the government for some structural reforms that will boost employment.