Ben Wray – Labour reform in Spain: Partial breakthrough or missed opportunity?

Ben Wray, journalist based in the Basque Country and co-ordinator of the Gig Economy Project, looks at the tensions which have emerged over the Spanish Government’s plan to reform labour laws

This piece was originally posted on Ben’s ‘Medium’ page.

Picture by CCOO Servicios

If there was one test in which Podemos’ participation as junior partner in a coalition government with PSOE was going to be judged upon, it was always likely to be labour reform.

Whether the left is using governmental power to re-balance industrial relations away from capital and towards labour is always a sound basis for assessing the risks of government, and whether they are worth it. More specifically, Spain has gone through two anti-labour reforms in the not too distant past, the first by PSOE under Zapatero in 2010 and the second by PP in 2012, both of which have entrenched temporary and insecure work in Spain. The country now ranks as the temporary employment king of Europe, with more than one in four workers on temporary contracts. In this context, labour reform is quite rightly the litmus test of Podemos in government.

The coalition government agreement, signed almost exactly two years ago today, included the “complete repeal” of the PP’s 2012 labour reforms, and the post of Minister of Labour went to Podemos’ Yolanda Díaz. There was a brief flurry of excitement that the repeal promise would actually be kept in May of 2020 when the coalition partners signed a letter with the Basque pro-independence left party Euskal Herria Bildu that agreed on complete repeal in return for EH Bildu’s votes in Congress. However, just hours after the letter was made public, PSOE was walking back on the agreement. While Podemos complained publicly about PSOE not keeping its word, they ultimately allowed their government partner to walk away from the letter. From that point onwards, a genuine repeal of the anti-labour laws has never looked likely.

In the year and a half that has followed, the negotiation of labour reform has been continually delayed and put off, but with the Spanish Government approaching the EU Commission’s deadline for submitting labour reform proposals before the end of 2021 in order to access EU recovery funds (more on that later), a nine-month negotiation lead to a deal finally being agreed with the ‘social partners’ (the employers associations CEPYME and CEOE and the two big Spanish unions CCOO and UGT) and signed on 29 December.

“Fundamental paradigm shift”, or “consolidates the current labour model”?

Díaz, who is also a deputy prime minister in the government and Podemos’ likely next leader, predictably labelled the agreement “historic”, saying it was a “fundamental paradigm shift” in the Spanish labour market, and that although “technically” the PP’s labour reforms were not repealed “politically yes it can and it is done”.

On the other hand, CEPYME and CEOE issued a joint statement after the agreement stating that the labour reform “consolidates the current labour model”, adding that “it maintains intact the internal flexibility mechanisms that guarantee the adaptability of the companies to the circumstances, ensures the freedom of business and legal security and contributes to social peace.” Miguel Garrido, head of the Madrid employers’ association (CEIM), said the PP’s 2012 reform “had not been touched much”.

Which presentation of the agreement is closest to the truth? A de facto repeal of the PP’s reforms Díaz’s deal most certainly is not. Perhaps most importantly, the key area of dismissals has been left untouched. As a statement from a coalition of smaller unions in the peripheral nations of Spain put it: “As we have experienced in recent years, the employers have used [the 2012] reform to dismiss workers unilaterally, without any guarantee or defence for them. Therefore, this reform perpetuates the precariousness of the labour market, as employers will always have in their power the weapon of dismissal to put pressure on workers.”

There are also new provisions for employers, read in the press as sweeteners to convince big business to back the agreement. The temporary layoffs during the pandemic, with government paying up to 70% of wages, will be incorporated into ordinary legislation. Furlough will become part of the new normal in Spain. This process will be made more simple for businesses and include exemptions from paying social security contributions.

On the otherhand, there are positive changes that could make a difference to strengthening labour power. Fixed-term contracts, used by companies like Amazon to keep workers in constant fear that they will not have their contract renewed, will be abolished. There will be a presumption of permanency for anyone who has spent 18 out of 24 months in the same job or within the same company. This could be a significant step to ending the widespread use of temporary contracts in what are, in reality, permanent jobs. There is also a provision to strengthen trade union rights, with collective agreements only expiring when a new collective agreement is signed, rather than on a pre-determined date.

Mariano Hoya, deputy secretary general for union policy at the UGT union, is therefore right to point out that it’s the first labour reform since the post-Franco transition “in which rights are recovered.” It is clearly of some significance that the neoliberal tide has been partially stemmed. But the proposals are well below expectations when PSOE and Podemos made their power-sharing agreement, and that cannot be disguised by rhetoric about history being made.

The firm hand of Brussels

The labour reform agreement was not only a domestic affair. As El País was quick to point out, the negotiations came under “the close supervision of Brussels”. One way of looking at the final text — rather than it being shaped by tough negotiations between the unions and the employers’ association — is that it complies entirely with the European Commission’s demands, which was yjsy the uniquely high rates of temporary employment in the Spanish economy be tackled without hindering the “internal flexibility” of businesses.

It’s important to recognise that this sort of extensive involvement of the Commission in what is entirely domestic legislation is without precedent, except in the exceptional circumstances of the Troika-controlled bailout negotiations during the Eurozone crisis. What has permitted this incursion into Spanish sovereignty is the pandemic-induced ‘Next Generation EU’ recovery funds, in which Spain is set to receive one of the largest financial packages from Brussels, €69.5 billion in grants and a similar sum in loans, but with strings attached.

Some on the left have welcomed the Commission’s pressure on Spain to address problems in its labour market, but a El País have previously reported, Brussels “does not want to see the 2012 laws repealed”. Moreover, Commission-mandated reforms are also due on the “sustainability” of Spanish pensions “sustainability” as well as “unifying market criteria” to avoid “regional regulatory fragmentation”, neither of which is likely to be favourable terrain for the left.

Perhaps more significantly, a precedent has been set whereby European Central Bank-generated pandemic funds — which in the UK, the US, Japan and any other nation-state which has its own central bank has come without strings — is predicated on the implementation of structural reforms. This time it is about the labour market but next time it could be about deregulating finance or anything else which the unelected Commission deems to be necessary to bring a member-state into line with ‘European norms’. It’s remarkable how little discussion there has been about what this means for European democracy.

Absent a majority

Limits on the Spanish Government’s legislative power are profound, but the most constitutionally significant — the fact the PSOE-Podemos coalition is absent a majority in the Spanish Congress — has perhaps been given the least consideration by the Minister for Labour. Díaz has jumped through the hoop of Brussels diktat, as well as the hoop of the ‘social dialogue table’ which hands the employers’ association an effective veto over government legislation, but has spent little time concerning herself with the final hoop; winning the support of parties outside the government for the law.

“Zero hours have been dedicated to talking with Esquerra [Republicana] — about the new labor reform — and that is always bad business,” Gabriel Rufián, leader of the Catalan centre-left, pro-independence party, said following the announcement of the government’s labour reform proposals. Esquerra Republicana (ERC) have been a key source of votes for the minority Spanish Government in Congress, but they have said they won’t back the labour reform as it is currently constituted.

The Catalan radical left pro-independence party CUP have also said they won’t vote for the reform, as have ERC’s allies in the Basque Country, EH Bildu, and in Galicia, the Galician National Bloc (BNG). And, for different reasons, the pro-independence centrist party in Catalunya, Junts Per Catalunya (JxCAT), and the centrist Basque Nationalist Party (PNV), have also voiced opposition. The problem for Díaz is not that at least some of these parties cannot be negotiated with, it’s that to even appear to re-open negotiations over the substance of the labour reform now would get frowns from Brussels and potentially see CEOE — which is already under pressure internally — pull their support for the reform.

An alternative route to passing the law could be found, not via the nationalist parties of Spain’s peripheral nations, but through the virulently Spanish nationalist right-wing opposition. Spanish Prime Minister Pedro Sánchez has opened the door to courting the centre-right party ‘Citizens’, but their votes would not be enough in and of itself. Pablo Iglesias, the founder and ex-leader of Podemos who now plays the role of supportive media commentator, has warned that the PP could abstain in order to allow the reform to pass “to harm Yolanda [Díaz] and that the majority of the investiture with ERC, EH Bildu and the PNV is broken”.

Certainly, it would be a huge political embarrassment if the most important reform to be led by Podemos in this government, touted as a repeal of the PP’s 2012 anti-labour law, was passed with the help of the PP. Iglesias, who is well aware that the reform does not live up to expectations, is urging Díaz to get round the table with the minority government’s allies in the peripheral nations.

“In politics, just as you have to negotiate with businessmen, you have to negotiate with parliamentary groups,” he said.

A “modernisation” agenda?

For many Podemos supporters who invested hopes that the coalition government could make serious head-way against neoliberalism, the limited labour reform is just the latest demoralising blow. What Iglesias and other Podemos faithful argue is that they are playing a difficult hand as best they can. Podemos are a very junior partner in a government led by a party, in PSOE, which fits the mould of traditional social-democratic parties which are fully signed up to neoliberal orthodoxies.

“The correlation of forces is what it is,” Iglesias argues, “the PSOE has been many times more in agreement with the proposals of the employers than of the unions.”

The victim of circumstances narrative leaves something to be desired when one takes into account that PSOE required Podemos as a coalition partner in order to govern. PSOE sought to win a majority without Podemos in two general elections in 2019, and failed. They could not risk asking the public to vote a third time. This gave Podemos significant leverage, surely sufficient enough to avoid giving the employers’ association a veto over its most important legislation. Suffice to say, the Spanish unions held no such veto in 2012 when the PP passed its anti-labour reforms.

“Why do the right wing have no scruples in legislating without the support of the unions and some left, nevertheless, have enormous complexes in leaving the bosses out?” Arnaldo Otegi, General Secretary of EH Bildu, asks. “Does anyone think that in the current political context the CEOE is going to sign and endorse a ‘counter-reform’ that structurally neutralises what the Rajoy labor reform meant?”

Writing in Catarsi, Brais Fernández offers a feasible explanation for Podemos’ commitment to the ‘social partners’ which is not rooted in realpolitik, as Iglesias argues, but in an ideological commitment to what Podemos Minister and Alberto Garzón has called Spanish “modernisation”. In this configuration, the most important nemesis of social progress is not the capitalists per se, represented institutionally by the CEOE, but the Spanish right-wing, which defends the most backward, parasitic elements of Spanish capital, and thus prevents Spain from transitioning from a low to high productivity economy. This is “something that the Government can only solve if a part of the business class, the most dynamic and alive, is part of the solution”, Garzón and Enrique Santiago, Podemos MP and General Secretary of the Spanish Communist Party, write.

A political strategy based on building an alliance with the “modernising” elements of Spanish capital is fraught with problems, not least because many of those businesses at the cutting edge of capitalist development are the most reactionary. Take the Spanish food delivery platform Glovo, which helped instigate a reactionary social movement of food delivery couriers against Díaz’s “Riders Law”, refuses to comply with the Law even after it was passed and has close links to the right-wing PP. Transnational platform capitalism, deeply integrated with the financial system, is the modernising force of the global economy, and it is breeding unprecedented inequality and corporate oligarchy. “Modernisation” isn’t social progress.

If we take this modernisation agenda seriously as a motive force behind the labour reform, what does it tell us? “If the thesis is that priority should be given to alliances and links with employers, the “non-labor reform” promoted by Yolanda Díaz plays the role perfectly,” Fernández writes. “It is nothing more and nothing less than a translation in labour terms of the famous ‘modernisation’, as it adapts the regulatory structure of labour to the political and economic needs of capitalism.”

As Fernández points out, this modernisation thesis is not new on the left, it was “the old axiom shared by right-wing Eurocommunism and social democracy converted to social-liberalism (the most advanced synthesis of which is the Italian Democratic Party).” It was wrong then, but it is even more obviously mistaken now — in the late stages of the era of neoliberal financialisation — to believe that there is a genuine breach to be found between different sections of capital, all of which — new or old, rentier or productive — are served by the state-finance nexus which underpins the present order.

The alliance that is required in Spain is not between progressive sections of capital and the left, it is between different sections of a fragmented working class, which has partly been broken apart by waves of labour reform in the post-Transition era that have made precarity a core feature of work in the Spanish economy. Díaz’s labour reform does not deepen that precarity, but neither does it provide the foundations from which it can be overturned, and as such it can’t be seen as anything other than a major missed opportunity for the left.Ben Wray

Journalist, from Scotland, live in the Basque Country. Will be using this mainly to write about politics in Spain. @Ben_Wray1989,

Be the first to comment

Leave a Reply

Your email address will not be published.