Content publisher


Who pays for the invoice labour reforms?


Published in

The World

Pedro García del Barrio

Lecturer at School in Economics and Business Studies

The invoice of the numerous labour market reforms implemented in Spain is proving unspeakably more burdensome than paying the invoice electricity bill. fees The cost to a country's prospects of suffering the consequences in the form of unemployment as disproportionate as Spain's, with youth unemployment of 30% in December 2021 (or 40% in December 2020), makes one dizzy to gauge.

workIn the following lines I will point out two factors which, in my opinion, are key to understanding the anomalous and serious situation of our labour market status , and its relationship with the labour reforms as a whole. It is significant that, since the framework of collective bargaining and labour relations was established - with the 1980 Workers' Statute -, eight more reforms have been undertaken in our country. The sequence of amendments that have followed the aforementioned rule (in 1984, 1992, 1994, 1997, 2001, 2006, 2010, 2012 and 2022) gives an idea of the crazy attitude of our rulers, who have introduced reforms approximately every 4 years, a period that usually lasts one legislature. I would like to focus on two important considerations, leaving to other analysts the study of the concrete implications that the changes of a new reform may entail, with its usual clauses, casuistry and multiple exceptions.

The structural and persistent unemployment that Spain has suffered for decades is result due to an accumulation of variables that are not easy to unravel, and even less so in a few brief lines. Without ignoring other factors that are often mentioned, I would like to highlight two calamitous facts that have a very negative impact: first, the dissociation between the pursuit of the general interest and the particular interests of political decision-makers; second, the asymmetry in terms of the effects of these policies on citizens, on the one hand, and on the other on those who - having brought them about - try to evade taking responsibility for them.

The first problem is well known, and represents one of the main criticisms of discretionary politics. The public distrusts public decision-makers because their interests too often contrast with the priorities of the citizenry. This discrepancy of objectives becomes more serious and evident in democracies with short terms of office, as the Nobel Prize winneraward James Buchanan denounced at Economics . From agreement with the "Public choice theory"politicians are often tempted to adopt popular (often short-term) measures, advantageous for their possible re-election, while systematically postponing other policies that - although necessary and preferable in the long term deadline - are unpopular.

The second aspect is perhaps more subtle, and therefore less easy to appreciate. Faced with the possible risk of a wrong decision and its consequences, our societies often respond with one-size-fits-all solutions ("coffee for all") or with an intricate amalgam of regulations, which degenerates into an ill-considered hypertrophy rules and regulations . (Think, for example, of the lawsuits against doctors and the generalisation of signed consent to exempt from liability for any intervention). Admitting the difficulty of making decisions in an uncertain environment, it is a matter of prudence to weigh up the costs so as not to exaggerate them, avoiding that the individual damage resulting from an error does not tip the balance entirely in favour of covering all risks, as such a position is not sustainable either in the short term, let alone in the long term deadline.

By now, some readers will have left us, and others will perhaps be disoriented as to how these reflections relate to the labour reforms. Well, that is precisely the point: beyond the rights or wrongs of the latest reform, and given the political ups and downs that continually alter the rules of the game, we have ended up in the fatal status of "not knowing where we stand". The seriousness of the problem, in my opinion, lies in having tolerated the fact that one reform after another (be it in the field of educational or in the labour market) can be implemented without giving time for the intended results to mature. As soon as a reform has just been passed, we do not know how soon it will be rejected. And this uncertainty derived from an unpredictable environment turns the decision-making process of a challenge into a kind of "veto" on initiative and entrepreneurship, and therefore on the creation of employment.

In short, for the sake of truth, and without wishing to temper the optimism that should preside over our efforts, it cannot be denied that in our times there has been a proliferation of continuous reforms which, when not unnecessary, are "improvements for the worse". Of course, it is admissible to err ("...").errare humanum est"But it is wiser to appreciate what has worked in the past, particularly in the area of market and economic policy.

So, as far as the work market is concerned, what should be done to combat the structural and persistent unemployment, which curtails the prospects of our young people and their employment prospects? Much of the damage described above could be remedied if there were a willingness to reach consensus on key issues - the creation of employment is one such issue - and to follow through on them. But if the integrity of our leaders is not up to the task, they should be stripped of decision-making on core topic, so that their short-termism does not ruin Education or employment. (Or it could be stipulated that structural reforms in relevant areas cannot be undertaken without respecting certain deadlines. This would be the starting point for trying to change the drift of a work market with poor opportunities for all and even more so for young talent, which either frustrates and fails or emigrates. Of course, reversing this status would make it possible to optimise unemployment benefits, as there is no better insurance than enjoying a good work space.

At final, we should demand that public decision-makers favour employment, by implementing measures regardless of how unpopular they may be. But if they continue to be found to be incapable of putting the common good before party interests, it would be imperative to change the status quo by stripping them of the discretion they have in such matters. A decisive measure of this kind, subject, would help to prevent changing regulations and an uncertain environment from degenerating into a paralysis of the business fabric, weighed down by unnecessary bureaucratic red tape.