A pact merits a tryout

Prime Minister Mariano Rajoy does not see the national pact on promoting employment that the country’s main labor unions called for during a meeting on Thursday at La Moncloa, the Spanish leader’s official residence, as feasible. Instead, in the presence of leaders of Spain’s business organizations, he offered dialogue on specific reforms such as the state pension system. The deep recession and the hammer blow of 6.2 million people out of a job are behind the tactical shift of a prime minister who had previously shown himself reluctant to enter into a dialogue. However, Rajoy also let it be known that he has no intention of giving up his own road map and is ready to assume whatever “cost and wear and tear” this involves. His comments sound like a throwback to his Socialist predecessor José Luis Rodríguez Zapatero’s declaration of “at whatever cost and whatever it costs me.”

Rajoy’s decision to summon union and business leaders to La Moncloa amends the error of having failed to meet publicy and jointly with them in the 16 months he has been power. During that period, the country has endured two general strikes and Rajoy also suffered the uncomfortable situation of seeing German Chancellor Angela Merkel calling a meeting with the leaders of Spain’s two main labor unions, CCOO and UGT, before he had himself. Opinion polls reflect the heavy price that the prime minister has had to pay for his self-imposed isolation and the lack of tangible results that this strategy has produced. Hence his U-turn.

Another thing is what one can expect to achieve with social dialogue. The leader of the main opposition Socialist Party, Alfredo Pérez Rubalcaba, believes this is insufficient. Rajoy, who claims to have spoken a lot with Rubalcaba, did not waste the opportunity on Thursday to complain about the lack of support he has received in the initiatives he has pushed through parliament, including the labor reform, the budget stability law, the overhaul of the financial sector and plans to deal with the problems raised by evictions from family homes and savers trapped in preferred share schemes. Rajoy is only happy with the backing he has received on “European matters,” which are the most important, as he himself made clear on Thursday. Rajoy persists in not allowing the opposition to win any political tricks, accusing it of only seeking to increase public spending for which there is no money. He finds himself in the same boat regarding the labor unions, which have asked him to increase the tax load not by raising value-added and personal income tax rates but by going hard against tax fraud in order to bring the black economy to the surface and by overhauling regulations governing SICAV investment funds.

The exclusion of the opposition in parliament reduces the scope of the prime minister’s field of action but should not kill off hopes for social dialogue, however limited this might be. It is positive that the labor union leaders have presented their proposals in a moderate fashion and have eschewed adopting a doctrinaire approach.

The government now has to demonstrate that Thursday’s meeting was not a mere testing of the waters as regards the unions’ willingness to persist with wage moderation or their acceptance of pension reform but a response to the great majority of Spaniards who have called for pacts to deal with the crisis.