The government's limits

On Wednesday, the government managed to save its decreed reform on collective bargaining right at the last minute. The approved bill included the modifications established in the June 10 Cabinet meeting. The abstention of the CiU Catalan nationalist bloc and the Basque Nationalist Party (PNV) - after hours of negotiation that foretold a categorical "no"- led to the approval of the bill, which will now be amended according to the agreements reached (if indeed there are any) between businesses and unions, or any that can be settled between the political parties. The difficulties of the collective bargaining issue reveal the parliamentary weakness of the government. There is no reason for the executive to bring forward elections as long as there is stability in the upper and lower houses; but the reluctance of CiU and PNV to provide support augurs a stormy parliamentary period, in which there are no guarantees that the Socialists will be able to govern until March 2012.

The problem with getting the new collective bargaining bill through parliament is that none of the groups knew how to analyze the content of the decree with regard to the objectives it is seeking- i.e. making the relationship between employees and businesses more flexible in order to adjust salary costs and activity levels to the situation that each company finds itself in. Those opposed to the decree put forward rhetorical arguments (according to the opposition Popular Party, the main problem with the decree is the "show" that the government has put on with its negotiation with PNV and CiU) and those who doubted the decree did so because it puts state agreements above regional ones. However, the bill responds to three objective needs: it was necessary to offer an answer to those who, inside and outside of Spain, were calling for reforms to agreements so that they are no longer a hindrance to the survival of companies; the limitless prolongation of expired agreements; and the need to make certain clauses more flexible, so that company agreements have preeminence over those of the sector or territory in question.

Seen from this perspective, the decree that will now become a bill would seem to be more of a transitional regulation- better than the legislation that preceded it but far from the expectation of those who believe that getting rid of the huge negative impact of collective bargaining agreements on job creation is a must and that fixed contracts with 20 days of compensation payment is the only way to do so. The transience is evident, what's more, given the general belief that the PP, if it wins power, will act in line with the demands of the CEOE employers association in terms of collective bargaining.

The labor minister, overwhelmed by demands from the IMF that Spain bring down the cost of firing workers and link salary rises to productivity, also failed to clear up doubts on Wednesday over the possible unconstitutionality of obligatory arbitration. But he did make clear that the demands of the IMF are not an option for the government over the next few months. At least Spanish society is very clear on what the limits of this executive are.