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Sandalio Gómez , Professor, IESE, University of Navarra

Will the labor reform help to create employment?

Fri, 10 Sep 2010 08:59:51 +0000 Published in El Periódico de Cataluña

There has never been a greater consensus in our country on the need for an in-depth labor reform. The goal was clear: to create the conditions that would encourage the generation of employment. In this legislature, the unemployment rate has exceeded 20%, double the European average and, what is worse, with no prospects of improvement in the medium term deadline.

For a year, an attempt was made to reach a social consensus between employers and unions, which ended in the summer of 2009, with a resounding failure. From that moment on, the Government assumed responsibility, seeking the greatest possible consensus. In other words, more than two years have passed, in which the crisis has worsened, making a lot of noise to get to the end with few nuts.

The employers consider that the reform does not address the problems core topic or does so in a "timorous" way and the unions are preparing a general strike for the 29th as a response to what they call "an attack on workers' rights". Almost nobody likes it. Now, the important thing is to answer this question: will it achieve the objectives of generating employment and reducing unemployment? If not, we would have wasted three years for nothing and discouragement would be installed in a society that declares itself incapable of solving its problems.

The reform focuses its attention on the following issues:

1.- The beginning of the labor relationship, that is, on the types of contract. A generalization of the contracts of promotion to employment was expected, without limit of time or circumstances of the worker. The reality is that the cases have been extended but without daring to generalize them.

2.- The termination of the employment relationship: the causes for dismissal. The only novelty worthy of note at accredited specialization consists of a broadening of the grounds for dismissal goal, so that judges can find reasons to increase the percentage of fair objective dismissals. It must be recognized that ambiguity continues to preside over the text.

3.- The promotion of the suspension of contracts and the reduction of workshop. This is the most positive point. It aims to slow down the move to termination, in the first instance written request, by the business.

4.- The adaptation of sectoral agreements to the conditions of each business. Instead of simplifying the process, it complicates it further and makes it slower than at present; nor are the issues specific to the different levels of negotiation clarified.

5.- The elimination of the ultra-activity of the agreements. No mention is made of this measure, which is the one that prevents the adaptation of the agreements, designed largely on the basis of the business model of the 90s, to the current reality of the business, as a means of improving its competitiveness and ensuring its survival.

In final, a clear and forceful reform was needed in the aspects core topic that would transmit security and confidence to the employer, that would not offer doubts or ambiguities, to some and to others and that, in final, would help to combat unemployment. We will see the answer in a few months' time.