Dithering Hamlet

Angela Merkel recently told it as it is, remarking: "The key is whether we want young people to have a lower-paid job, or no job at all." It's hard to express the dilemma now facing young people more clearly. A few hours later the Bank of Spain put it in more technical language, proposing "new formulas [for the Spanish labor market] that might allow, in special cases, temporary departures from the conditions laid down in collective bargaining agreements, or exceptional mechanisms to prevent the minimum wage from acting as a constraint on specific groups of workers with most difficulties in terms of employability."

In plain English: companies could legally hire you paying less than the minimum wage (645.30 euros a month), and with no collective bargaining agreements. The neoliberals' dream: a return to the working conditions prior to the Great Depression of the 1930s, dumping everything the New Deal, and later legislation, meant in terms of labor law. Why? Well, because we have 6.2 million people unemployed in Spain, a situation that has been caused by a persistent recession and a bungled reform of the labor market. According to the Bank of Spain report, the PP's reform has not served to stop the destruction of jobs, nor to incentivize their creation, nor to prevent the duality of the labor market, which was the excuse for its implementation. It does, however, function as a way to make firing cheaper, and, as a collateral effect, to devalue salaries, according to the National Statistics Institute (INE). It has brought a shift of power within firms (more for the employer, less for the union), and a regressive redistribution of income in terms of national accounts: wage income ceases to constitute the larger part (44 percent of the total), which, since the end of 2012, has been constituted by company income (46 percent).

The bank's report (and the speech by its governor, Luis María Linde), deals with these matters at length, but falls short in others. It mentions the exceptional nature of the labor market (jobs under the minimum wage, no collective bargaining) but does not reflect on how much of the blame for having 27 percent of the active population unemployed falls on an inefficient productive model, the torpid quality of the Spanish entrepreneurial fabric, and the relative inadequacy of the institutional framework. All this, in a context in which the OECD predicts a new surge in unemployment in Spain, to 28 percent of the active population.

The central bank's report proposes no exceptional measures against the prolonged absence of credit

Nor are any exceptional measures proposed against the prolonged absence of credit, which is strangling many firms and households, though the Bank of Spain's latest economic bulletin, for April, perceives a "slight intensification of the tightness of credit." We see only one theoretical reflection (no proposal attached), about whether tight credit "should be attributed more to those operating on the supply side than to those on that of demand."

Lastly, in the Spanish macroeconomic analysis (fiscal consolidation, bank restructuring, growth and employment prospects) there is not a trace of the consequences that the recession is having on the Spanish economy in terms of poverty, exclusion from the system, and inequality. In short, it is a report with a heavy ideological bias.

Recent weeks have seen the introduction, in the unemployment cocktail, of various novel ingredients: the single contract proposed by the president of the Eurogroup; the Bank of Spain's exceptionality in matters of minimum wage and collective bargaining; and the "reform of the labor market reform" now being imperatively demanded by Brussels, in exchange for greater flexibility in terms of the time frame for bringing down the public deficit. A reform that has to be presented before the month of September. Will Rajoy, our hesitant dithering Hamlet, make a move?