Saturday, February 18, 2012

Why employment reforms are a warning for workers all over Europe

Depressing salaries, free dismissals and other gems: Spain's right-wing solution to the economic crisis.

The Spanish trade unions have labelled it "the harshest and most aggressive employment legislation [of the post-Franco era]".

Opposition parties are already planning to appeal to the country's highest judicial body, Tribunal Constitucional, on the grounds that it may be in breach of the most basic rights.

No-one can deny that Spain's new labour reforms, announced last week by the new arch-conservative government led by Mariano Rajoy (photo), are causing a political stir that is threatening to shake the country's foundations.

The background is that a combination of Spain's scary unemployment rate (just under 23%, the highest in the Eurozone) and the country's worst economic crisis in generations, handed the centre-right People's Party a landslide victory in last November's election.

And while everyone agreed that measures had to be taken, it now looks like the priority is simply a massive raid against workers' rights - the same rights that didn't stop the country from creating more than half of all the new jobs in the EU in the period 2000-2006.

Indeed, when People's Party leader Rajoy was asked to explain his plans during the election campaign, he repeated that he would "never" attack workers' rights or "make it cheaper to fire workers". He even posted a Twitter message to ram the point home.

Yet, a mere 55 days later, the total opposite has happened.

This should concern workers all over Europe, because the "Rajoy method" may inspire right-wing governments and rampant "free marketeers" in other countries too.

Here are some of the reasons why:

1. Companies can now unilaterally impose a pay cut.

While this is still illegal in Britain, on the grounds that it would amount to a breach of contract under the Employment Rights Act 1996, for the first time since 1889 the new Spanish law will now allow bosses to "modify" their staff's salary without agreement.

This can be applied collectively or to specific members of staff and - check this out - the new law states that this can be done simply "if there are proven economic, technical, organisational or productive reasons", which is extremely ambiguous and is an open door to abuse.

For instance, a company now needs to quote losses (any losses, it doesn't matter how much) over two consecutive quarters in order to slash their staff's wages until further notice and nearly as much as they like, even if the following quarter brings about record profits.

The only constraints are that they're required to notify it at least 15 days in advance and that they can't go under the statutory minimum wage, which in Spain is €641 per month.

2. Employers can unilaterally modify their staff's working hours or even tasks as decribed in the contract.

Again, all they need to do is tell the hapless worker 15 days in advance citing the above-mentioned catch-all "economic, technical, organisational or productive reasons". If the employee doesn't like his new timetable, let alone new "duties and responsibilities", all he needs to do is grab his coat and hope for the following point.

3. Firing workers is now up to 71,5% cheaper than until the other day.

Admittedly, Spain had one of the most expensive payout packages in Europe (45 days per year worked up to a maximum of 3 and 1/2 years). This was often branded the reason for the country's endemic use of casual and temporary contracts, often the easiest way to sidestep legal restrictions.

However, in one fell swoop, workers will now be entitled to 20 days per year of service, up to a maximum of one year - that is almost three quarters cheaper than it used to be.

4. Back pay is abolished.

If a dismissal is deemed "unfair" by a judge, the company will only have to fork out a payout and no longer the so-called "back pay" (which is the salaries corresponding to a worker between the time he was dismissed and the time a favourable award is obtained from an employment tribunal).

5. Probationary periods are now extended to one year.

While Rajoy's ministers keep mouthing off that the new reform is an incentive for bosses to offer "permanent contracts", critics point out that these are only "permanent" in name.

And that's because trial periods are now also doubled from 6 months to one year.

That is to say, for one full year, an employee can have their contract terminated for no reason and with no right to notice or payout. Note that pregnant women too, until the other day covered by protection against "unfair dismissal", can now be sacked absolutely free during the first 12 months.

Which is why the new "permanent contract" Rajoy-style hands the worker even less protection than the old "temporary" one (which at least included the right to a payout of 8 days per year worked).

As for employees in the UK, we can only hope that at least some of Rajoy's measures are blocked by the Constitutional Court, or that their predictably depressing effect on the Spanish economy (mass salary cuts are already under way) will be enough to put off our own government.

1 comment:

Patrick Gray said...

If you're a worker you should have responsibilities, sure, but also rights.

And it's a dengerous logic this conservative one, because if workers end up having responsibilities only, and no rights left, then they're no longer free. And that is plainly wrong.

A financial crash doesn't mean that basic rights become fair game.