Job creation blow: hiring will be much more expensive

The second vice president, Yolanda Díaz, appeared at the press conference after the Council of Ministers with an air of greatness. “Today is not just any day. It is one of the most important days of the Government and of this legislature,” he said to sign up for both the labor reform sealed with employers and unions on Christmas Eve. And he went on to say, under the absent gaze of the spokesman minister, Isabel Rodríguez, that the reform “will change people’s lives”, that it will end “labor depreciation and wage devaluation” and that “it turns the page on precariousness. labor”. A whole string of hackneyed and clichéd phrases against the 2012 labor reform that the vice president intends to use for partisan purposes to launch her political project for the next elections.

After calling herself “a humble labor lawyer” (her previous job), the vice president was proud of the internal discrepancies within the CEOE bosses, where four large organizations abstained in the final vote. His words reveal the little appreciation he has for entrepreneurs.

Make no mistake, this is a reform against companies, which tightens and restricts hiring and firing conditions in a world with the flexibility to be competitive.

Behind all this talk, there are figures that belie his claims. The labor reform promoted by his predecessor Fátima Báñez allowed the unemployment rate to be lowered from 26 percent to just over 14. Around eight points, which involved creating more than 2.5 million jobs. Unfortunately, Báñez, appointed president of the CEOE Foundation a few months ago, remains silent so as not to interfere in the message of the president of the employer, Antonio Garamendi.

Will have to see how many jobs are created with the labor counter-reform. To begin with, nor does not collect a measure to tackle the problem of youth unemployment, which touches rates of 40 percent.

Díaz sells smoke, as the ERC spokesperson accused him, Gabriel Rufián, when he talks about tackling temporality and precariousness. Its reform aims to hide the labor duality by convert temporary permanent jobs into permanent jobs, thanks to the legal status of permanent permanent jobs and the authorization to the ETTs to apply them without limit, as reported the Economist.

With this magic formula, taken from the hat of the vice president and the unions, no less than a million temporary jobs will be camouflaged to access European Next Generation funds.

With the handicap that those most affected by the pandemic, hospitality and tourism, will be burdened with larger compensation if they have to lighten the workforce, pOrque in the dismissals it will compute all the seniority and not only the actual period worked.

Another element that will soften unemployment rates are the famous Ertes, which will be used, as in a pandemic, to avoid collective layoffs. The key will be whether to take advantage of those periods of inactivity to facilitate training that allows workers to renew themselves and address new challenges.. One of the positive aspects of the reform is in the training contracts, which can be extended up to two years, an instrument so that companies mold their future workers to their liking.

There is much to discuss about quality and job insecurity. It is true that the average salary of Spaniards (26,934 euros) remained practically stagnant during the last decade, but it is also true that there was hardly any inflation and that Spain took much longer to recover than the rest because it was one of the worst hit by the real estate crisis in 2008, as is the case with the coronavirus.

One of the most regressive points of the reform are the agreements, which maintain flexibility regarding the modification of schedules or individual circumstances, but They oblige the observance of sectoral agreements to establish annual salary increases, one of the main weapons so far to gain competitiveness.

It is a measure to counteract the loss of union membership, along with the return of the ultraactive, the maintenance of the salary agreements until the agreement is renewed, which will increase inflationary effects. This practice, moreover, comes into flagrant contradiction with the warnings issued from the Bank of Spain and from the Government itself to avoid so-called second-round effects, which impair recovery.

The positive aspect is that se maintains the essence of the 2012 reform, fundamentally because it does not touch the conditions of the dismissals and maintains the flexibility of the agreements and the prevalence of the nationals over the autonomous ones, although they tried to change it without success.

The problem remains that of an economy based on products and services with little added value, which only competes on price against its rivals. When Fátima Báñez was asked, in the middle of the great recession, why sectors were going to get us out of the hole, she kept silent or simply said that that would be determined by the market.

In the end, it was services, mainly linked to tourism and hospitality, which again pulled jobs and the economy. The industry, creator of quality jobs, reduces its share of GDP from 16 percent to the current 11 percent, almost a third of its activity was lost on the way. The rate continues to decline.

I did not hear a word in Yolanda Díaz’s beautiful speech, addressed to her future electorate, about the reforms she will carry out to create jobs and make companies more competitive. On the contrary, the labor reform leaves them in more precarious conditions, because at a very delicate moment with rising production costs due to raw materials and energy, hiring becomes more expensive and restricted.

The Next Generation funds are aimed at generating profound changes in the industrial fabric, but their temporal scope will be so short and there are so many doubts about their effective distribution, that it is most likely that, with honorable exceptions, stay in a kind of Zapateresque plan E, with limited impact. The governments of Rajoy or Sánchez they avoid changing the production model.

For more Inri, Díaz shows a great reluctance towards the Next Generation. He speaks very little about them, it is not known if it is due to distrust or simply because Nadia Calviño, his great political rival within the Government, manages them.

If companies do not earn more money they will not be able to pay their employees better, that is a truth like a temple. The results are recovering, but what incentives do they have to contract with a rise in contributions from next year to pay for pensions and the arrival of a barrage of green or environmental taxes. On the contrary, they will face huge restructuring costs in the coming years. Industrial investment remains 6 percent below the pre-pandemic period.

Garamendi managed to carry out the reform among its affiliates, for fear that the Government and unions would agree to leonine conditionsSuch as the toughening of layoffs, if they left the negotiating table without reaching a compromise.

The lack of initiatives by employers to address secular problems, such as absenteeism or excessive union power given its low representation among workers, caused the abstention of the employers of Madrid and Catalonia, as well as the car and the countryside, in this case because the solution does not work. It was a defensive negotiation, in which the entrepreneurs took the worst part and that can still get worse.

Díaz assures that each paragraph, each word is “thought and rethought” and that from now on he will put “all his love and understanding” in the negotiation with the rest of the political forces to validate the Royal Decree in Congress. But what if it doesn’t. Entrepreneurs have no say in parliamentary decisions and their initial approval runs the risk of be used in an electoralist way in order to obtain the go-ahead before Brussels and public opinion. Anyway, a minimum agreement, which makes a bad start to 2022. Happy new year!