Spain: Government and unions conspire to impose austerity measures

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Spain: Government and unions conspire to impose austerity measures
By Vicky Short
10 February 2010

Prime José Luis Zapatero of the ruling Socialist Workers Party (PSOE)
government has held secret meetings with the leaders of Spain’s trade
unions to negotiate labour reforms and austerity measures behind the
backs of the working class.

Zapatero called secret and separate meetings with the Union General de
Trabajadores (UGT) leader, Cándido Méndez, and Comisiones Obreras
(CCOO) leader, Ignacio Fernández Toxo, late last month at his
residence, the Moncloa Palace. Asked why the reforms were found to be
acceptable this time around, after expressing opposition to previous
proposals, Méndez said, “They have the sufficient reach and the
flexibility to talk about how to make the labour market better.”

Since then, tripartite talks have taken place involving the
government, unions and employers over plans to radically change labour
relations, as demanded by the international financial institutions
such as the International Monetary Fund (IMF). The government has also
announced its intention to increase the age of retirement and extend
the number of years that people have to work in order to qualify for a
pensionable retirement from the present 15 to 25 years. It has also
revealed plans to increase Value Added Tax on goods and services,
which will directly affect the poorest layers of society by increasing
the price of basic necessities.

El Pais has called the talks “a miracle,” while the president of the
employers association, Confederacion de Empresarios de España (CEOE),
Gerardo Díaz Ferrán, described the proposals as “positive” and stated
that the draft agreement is going in a “good direction.” Similarly
approving was Jesús Bárcenas, the leader of the small industry
employers’ federation CPYME.

Though many of the proposals are vague, the clear intention is to
cheapen the cost of dismissals, increase flexibility between jobs and
raise the retirement age to 67 (the government had wanted to increase
it to 70). There will also be measures to stop absenteeism, which the
document cynically describes as being “always masked under the formula
of permanent sick leave.” A new system will be introduced that
increases interchange of information between the National Institute of
Social Security and insurance companies for accidents and work
sickness. The money saved will be reimbursed to the company.

Behind the claim to be ending the scourge of temporary contracts, “the
ending of duality” of employment between indefinite and temporary
jobs, is an attempt to make permanent jobs as flexible and easy to end
as temporary ones. The number of days paid in compensation for
dismissal will be reduced from the current 45 days per year worked to 33.

Under the guise of making it easy for people to combine work and
family life, the document proposes incentives to companies to increase
the number of permanent part-time contracts.

As a sop to mounting opposition to the 50 percent unemployment rate
amongst young people, the document proposes that companies train young
people in the areas that they need under proper contracts of
employment. And under the cover of achieving equality of wages between
men and women, there will inevitably be a general lowering of male
wages that far outstrips any rise in women’s pay.

There will be more regulation of the length of temporary working
incapacity or sick leave and a reduction of the working week in
accordance with the situation facing the company, rather than
dismissals. This would save the government money in unemployment benefits.

The scope of collective bargaining will be widened from wages and
hours to include mobility, adaptability and productivity. In other
words, the trade unions will be totally integrated in the running of
the company according to its needs in a time of crisis. Their role
will be to impose the attacks on living standards and intensified
exploitation demanded by the employers.

The government has stated that it does not think there will be a hard
response in the streets to these proposals. However, the form in which
they are being presented and discussed behind closed doors belies such
claims. The IMF has warned that Spain, together with Portugal and
Greece, will have to take drastic steps to address its budget deficit.
IMF chief economist Olivier Blanchard declared, “Now with this crisis,
Portugal, Spain and Greece are in serious difficulties … which imply
very painful adjustments.”

He added that the reestablishment of competitiveness may demand great
sacrifices, such as the reduction of salaries.

The Swiss bank UBS forecasted that the Spanish economy would continue
in recession until 2011 and that the unemployment rate could exceed 20
percent during 2010 and will stay at 15 percent for the next decade.
Under these conditions the bank said that a reduction in salaries of
over 10 percent for the next decade was necessary.

In an article entitled “Spain risks joining Greece at bottom of
deficits class,” the Financial Times reported that Spain wanted to
reduce its deficit from 11.4 percent of GDP in 2009 to the European
Union target of 3 percent in 2013, but it was not sure if it could or
how to do it. The “Plan for Stability” (read austerity) sent by the
Spanish government to the European Commission states that it would
reduce its deficit to the 3 percent demanded by the European Union in
four years, something that would require ferocious attacks on living
standards and working conditions. The plan proposes to cut expenditure
by €50 billion in three years, but this is only a down-payment on what
would be required to reduce the deficit by over 8 percent, which is
being demanded by the EC and the IMF. The cost of unemployment
benefits alone rose to €31.5 billion last year, 50 percent higher than
the previous year.

The fear that Spain and other European countries such as Greece,
Portugal, Ireland and Italy will not be able to finance their budget
deficits, and doubts by investors that they will be able to implement
their austerity programmes, accelerated a near crash of the Spanish
stock market on February 4. The Madrid index Ibex fell by nearly 6
percent, the biggest drop since November 2008. Julian Callow from
Barclays Capital warned that the EU may need to invoke emergency
treaty powers under Article 122 to halt the contagion. Otherwise it
could result in a “‘Lehman-style’ tsunami spreading across much of the
EU.”

The media is awash with speculation that if this happened, then these
countries could become ungovernable.

The Spanish media blamed the slump in the Spanish share market on the
warnings and threats levelled against it and supposedly false and
exaggerated comparisons made with Greece. This ignores the fact that
unemployment in Spain is double that of Greece, while the deficit is
only slightly less. The present monetary, bond and share crisis is the
result of the deepening economic difficulties facing Spain, combined
with speculation that has been fuelled by what global markets perceive
as the PSOE’s slowness in implementing attacks on working people.

The scale of Spain’s crisis is evident in the latest economic and
social figures, which surpass all official predictions. There was a
further rise in unemployment of nearly 125,000 in January, taking the
official unemployment figure to 4,326,500, or 18.8 percent of the
active working population. Other sources say that this is an
underestimation and that the jobless figure is more like 4.5 million
or 19.4 percent. On top of this, a lot of self-employed people who
have gone bankrupt are not claiming unemployment benefits and are
continuing to pay social security in order to safeguard their pension
rates.

Unemployment is hitting foreign workers and youth hardest. Reports
suggest that in the first three months of last year the unemployment
rate for foreign workers had reached 29.7 percent and the number in
employment had slumped from 11.75 to 6.1 percent. Temporary
employment, mainly in the construction industry, has dropped by 25
percent, again affecting the most impoverished layers of the working
population. The number of households with all their active inhabitants
unemployed has reached the staggering figure of 1.2 million.

The Federation of temporary work agencies, AGETT, reports that there
are more than 1.5 million long-time unemployed who will find it very
difficult to ever find new jobs.

At a breakfast meeting in London this week, organised by Barclays,
Citi and Santander banks, the Spanish finance minister, Elena Salgado,
and her deputy, José Manuel Campa, defended the government’s economic
strategy and the “reforms” it is going to implement. Afterwards Campa
said at a press conference that the government will reduce further
public spending if the economy does not recuperate at an adequate
rhythm. The government will make the “necessary adjustments” beyond
the plan of stability sent to Brussels in order to reduce the deficit
in four years, he promised.

According to El Pais, some investors openly expressed their doubts of
whether the PSOE’s measures would be enough and that the Spanish
government faced a dilemma: If it adopts harsher austerity measures it
confronts social discontent. If it does not it faces punishment by the
markets.

Manuel Chaves, the third vice president, said that the government was
going to present its plans for pensions reform and hopefully would
have a labour reform plan in place shortly. “It is very important (to
present) the image of unity between the government and the social
agents to the world,” he added, in a direct appeal to the trade union
bureaucracy. The PSOE has also asked for the support of the right-wing
opposition Popular Party (PP).

http://wsws.org/articles/2010/feb2010/spai-f10.shtml

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