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Isabel Rodríguez Tejedo, Professor of department of Economics, University of Navarra

More of the same, but less of what is needed

Tue, 10 Jan 2012 12:30:01 +0000 Published in La Razón

It seems that the Government will have to legislate in view of the lack of agreement between unions and employers. Do you think Rajoy should give them more time to negotiate or do you share the urgency of labor reform?

- So far it does not seem that significant progress has been made and the wait for reforms has been very long. More than a year ago the IMF devoted more than a third of the time of its informative commentary on predictions for our country to topic labor, and it was pointed out that we should go ahead with them and take advantage of the opportunities. While we are definitely not at the same status as we were then it doesn't look like waiting now is going to help us much.

From what is known about the negotiations, who do you think has conceded the most so far?

- It seems dangerous and almost irresponsible to try to apportion blame and losses. Moreover, approaching labor reform from the employer-union axis means forgetting the great sufferers of the current status , the unemployed, who are not adequately represented by either side.

Do you agree with the employers that dismissal in Spain is expensive and hurts employment?

- Although it can be argued that dismissal costs are high, it is worth remembering that the metric is not unique. Older employees are among the most protected in Europe, but young people generally enjoy lower levels of protection than our neighbors. However, it should be remembered that an important part of the problem lies in the lack of factor demand work, which is driven by the global status .

Should contract types be simplified? Are they too rigid?

- Perhaps before talking about rigidities we should talk about dualities. Some prestigious economists have proposed the elimination of most temporary contracts and the implementation of a single (indefinite) contract with increasing indemnities according to seniority. This proposal, however, does not seem to be accepted by any of the parties.

The unions are willing to moderate wage increases, but not to freeze them, and to allow employers and workers at each business to negotiate their own collective bargaining agreements that are not linked to inflation. Do you consider this aspect to be so important?

- Both measures are aimed at allowing a more flexible response in line with the reality of each sector and business. These measures can be important to try to make the prices of our products competitive and avoid inflationary spirals that erode our comparative position. A better solution would be to increase productivity, but perhaps the saying "for want of bread we will have to make do with cake" applies here.

What are the essential measures that, in your opinion, the government should adopt now?

- As we said before, we need to evaluate the reduction of temporary employment. The measures that were mentioned recently (the discount of the contributions for indefinite hiring) were not very successful in the past, and it is unlikely that they will be successful now.