José Luis Álvarez Arce , Professor at School of Economics and Business Administration, University of Navarra, Spain
Labor reform
After more than two years in which the crisis has taken its toll on our labor market, there are few who deny the need for a reform to free this market from the rigidities and inefficiencies that produce levels of temporary employment and unemployment unparalleled in other developed countries. The Spanish government itself has stated this need, although not in terms of reform, but in terms of "lines of action in the market of work". In any case, this is an apt name, because the governmental proposal does not point to an authentic reform, but to a series of disjointed measures that, being optimistic, can be understood as a minor reform.
The government's approach is inadequate in the face of the seriousness of status. With its proposals and the way in which it announces them, it turns the necessary discussion into unproductive discussions on minor aspects, which hinder a global vision of the problem, provoke fatigue or discontent among the agents involved and end up preventing the adoption of far-reaching reforms. In contrast to these government announcements, we find the proposals put forward by various institutions and organizations, such as the BBVA's programs of study service or the so-called group of the 100 economists. Without going into the details of each of them, these proposals have the attraction of proposing a comprehensive reform, coherent with the objectives to which they aspire. I believe they also have the attraction of a approach very different from the one that currently governs the institutional configuration of the labor market. They are, in particular, proposals that aspire to the defense of the worker.
Perhaps the above statement is surprising, since don't these proposals advocate reducing the costs of terminating permanent contracts? Indeed, they do, since they advocate the creation of a single open-ended contract with severance pay increasing according to seniority and lower than the current 45 days' salary per year worked. But this does not mean greater lack of protection for several reasons. Firstly, because this new figure would not be applied retroactively. Secondly, because such a contract would provide greater protection than temporary contracts, the cost of termination of which is practically zero. Thirdly, because this new single contract would provide a greater incentive for indefinite-term contracts by reducing costs for employer.
Of course, the reform should not be limited to this single measure, but should be accompanied by others that protect unemployed workers, encourage them to actively seek employment work, increase their employability and facilitate their rapid transition to a job employment. In this sense, many of the reform measures would have to be adopted in areas other than the labor market. In general, it would be necessary to undertake reforms that would modernize the patron saint of specialization , such as improving the educational system, introducing a greater dose of skill in certain markets or creating a more favorable legal framework for entrepreneurs. But many other actions should be implemented in the labor market itself, to make it a more dynamic mechanism for the creation of employment and welfare, also contributing to the change of model of growth.
Thus, collective bargaining requires modifications that lead to a wage-setting mechanism that is more attentive to unemployment and productivity conditions than the current one. More efficient active policies are needed at employment mission statement to increase the employability of workers, both through a training that expands job placement alternatives, and through better intermediation systems that reduce search and transaction costs for both providers and seekers of work. Regarding unemployment coverage, options should be sought that combine sufficient protection with incentives for the active search for employment.
As on other fronts of our economic policy, "more of the same" is a counterproductive recipe for the labor market. The Government and the social partners would do well to look at what other countries are doing and reflect, without prejudice, on the many interesting proposals published in recent months. From what has been seen so far, I fear that this will not be easy.