Spain: Workers Punished for a Crisis Not of Their Making
A decade after the 2008 financial crisis, Spain still ranks second when it comes to unemployment in Europe with a rate of 15% after Greece at 19%. Before the crisis, the country’s employment rate was booming, reaching 66% and placing Spain top of the class in the European labour market. But this situation reversed after 2008: during the past decade 2.3 million people have lost their jobs, accounting for 37% the of total job losses in the EU28. Young people were particularly hit, as 55% of the ones aged under 25 were unemployed during the peak of the crisis in 2012.
The crisis had enormous consequences for Spanish society, hitting workers especially hard. Workers were, in fact, the ones who produced the continuous economic growth between 1994 and 2007, which had led to the Spanish employment boom before the crisis (during that timeframe unemployment decreased from 22% to 8%). Yet it was workers who were expected to pick up the bill for the crisis through austerity measures and structural reforms imposed by the Spanish government and EU-IMF troika. The result was savage wage cuts and increasingly precarious working conditions.
The Troika presented a program of budget adjustment and structural reforms which was accepted by the Spanish Socialist government and strengthened by the Conservative one that followed. Even though Spain had never received a bailout from the Troika, the Spanish governments still implemented its recommendations. Since 2010, Spain has undergone a process of intense labour law modification that weakened the collective bargaining system.
The labour market deregulation carried out by Spanish governments at the recommendation of the Troika introduced flexibility which created more instability for workers, by allowing the introduction of different types of contracts like short-term or temporary ones. It also reduced wages and cut many of the benefits of previously enjoyed with permanent contracts. This increased precarious work and created a dysfunctional model that is socially unfair and economically unproductive.
The Pre-Crisis System
Before the crisis, Spain had an effective system of collective bargaining which made sure that workers got their fair share of the productivity gains they help produced:
- Collective agreements frequently established wage indexation rules that ensured the purchasing power of wages are not affected by inflation;
- The extension principle ensured that agreements automatically applied to all work- ers in the sector. Such sectoral agreements guaranteed that minimum standards in terms of wages and benefits applied to all workers in a sector. This prevented companies from free-riding and increasing their competitiveness by offering lower wages or fewer benefits;
- The previous agreements were automatically renewed in the absence of a new agreement, therefore increasing the willingness of employers to negotiate.
After the Crisis: A System Rigged Against Workers
The measures taken by Spanish governments and the EU-IMF Troika weakened collec- tive bargaining and decreased workers’ protection, favouring employers instead:
- After the 2012 reform, an element of intimidation of trade unions crept in with pressure on strikes and picketing, and lawsuits initiated at the request of public authorities;
- Collective bargaining was decentralised: company agreements were given abso- lute priority over sectoral or national ones. This made it possible for employers to circumvent the previously minimum protections provided by sectoral agree- ments;
- The reforms also introduced lower dismissal costs for employers, which led to the huge unemployment crisis and enabled employers to reduce wages without union consent;
- The automatic renewal of agreements was restricted to a maximum of two years, after which all established rights from previous agreements were terminated.
These changes have encountered huge opposition from trade unions and wider society, with two general strikes in 2012. However, the situation did not change. There is one exception in the chemical sector, where the CCOO and UGT unions have managed to ensure the conclusion of a sectoral agreement which covers around 3000 companies. But in other sectors, like the metal sector, bargaining has been much more difficult, especially with the car industry also facing outsourcing.
In 2018, the government promised to restore the primacy of sectoral agreements over company agreements on issues such as pay and working time, and also the validity of collective agreements after expiry. Workers are still waiting to see these promises become reality.
Meanwhile, the European Commission refuses to acknowledge the benefits of national and sectoral bargaining for our economies and societies. It continues to push for the break-up of national and sectoral negotiation in their regular recommendations to member states, including Spain.
The new Spanish government should ignore these as long as the Commission continues to bury its head in the sand. Rather, it should listen to the needs of workers who are the backbone of the Spanish economy and key to its recovery after the crisis. Without stronger collective bargaining at sectoral and national level, it is impossible for workers to negotiate a fair deal for themselves and their families.