EMPLOYMENT

Employers reject report they want further reforms to the labor market

Companies call for further measures that enhance flexibility and wage moderation

The Spanish Confederation of Business Organizations (CEOE) on Monday rejected a report that the draconian overhaul of the laws governing Spain’s labor market introduced by the new Popular Party government of Prime Minister Mariano Rajoy in February of last year making it cheaper and easier to sack workers does not go far enough.

Earlier Monday, Europa Press had reported that one of the main concerns of Spain’s biggest employer group remains the problems encountered in pushing so-called labor force adjustment plans (EREs) through the courts.

The reform introduced in February removes the need for the administration to approve EREs, which can be justified on so-called “objective” grounds from falling sales to technological or industrial developments.

An ERE allows a company to dismiss workers with compensation of 20 days wages per year served up to a maximum of one year. Severance pay in the case of unfair dismissal was reduced to 33 days per year worked from 45 days, with the maximum package cut to two year from 42 months.

After four labor reforms, Germany has a jobless rate of 6.9 percent

Of the EREs handled by the law firm Cuatrecasas last year, 22 were declared null and void by courts on the grounds of insufficient documentation, a breach of the right to collective bargaining or the absence of other formal requisites, while only nine were approved as being in accordance with the new legislation.

Although Spain has approved two labor reforms since 2010, employers feel a lot more can be done to improve the efficiency of the country’s job market, which, according to Labor Ministry figures, shed 2,000 jobs a day last year.

After four labor reforms in the past few years, Germany ended last year with a jobless rate of only 6.9 percent. According to the latest figures from the National Statistics Institute (INE), Spain’s unemployment rate as of the end of September stood at over 25 percent, the highest in the European Union.

In a statement released last Thursday after the release of the jobless claims figures for December, the CEOE said there was a need “to continue advancing in flexibility and wage moderation measures” under the terms agreed with labor unions in order to enhance competitiveness and create employment. They said this had helped companies to make necessary adjustments without recourse to sacking workers.

Economy Minister Luis de Guindos said at the start of this year that if the February labor reform had been introduced two or three years previously, the number of unemployed would have been one million fewer. The minister predicted the economy would be growing at a sufficient pace to create jobs against at the end of this year.

Employers are also unhappy with the government’s decision to backtrack on lowering the contributions companies have to make to the Social Security system, which is expected to have ended 2012, with a shortfall of some 10 billion euros, about 1 percent of GDP, when it was projected to break even.