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Saturday, August 13, 2022

Two exits from the crisis and two labor reforms

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A waitress serves a beer on a terrace in Valladolid.EFE

The job market brings great news today. She has done so on many occasions having weathered this recent crisis. As the pandemic emerges, employment is growing strongly, already hovering at peak levels reached 15 years ago, on a backdrop of a huge financial and housing bubble. It’s different this time. thereafter brick feast, Spain has suffered a terrible hangover from which it has been very difficult to get out, so much so that when the coronavirus arrived, the 20 million labor force mark lost at the time had not yet passed. This symbolic bar was crossed a year ago – more or less – and has not been lost. This latest Active Population Survey (EPA) tracks 20.5 million jobs. Exceeding the maximum marked in 2007 is in the hands of the war in Ukraine and the return of the dreaded inflation: it is likely that the economic autumn and especially the winter will be poorly perceived, depending on Putin’s trip with gas work. But now the Spanish economy has a different story to tell than other ways out of the crisis.

The exit from the Great Recession and its aftermath has been greatly aided by the tailwinds of the last decade (cheap energy, massive ECB debt purchases, 0% interest rates, cheap money and other extraordinary monetary policies). But also the deep and controversial (“extremely aggressive,” Guindos said) labor reform of 2012, which has made employment much cheaper…or, what is the same, made it more precarious. His defenders may say it was necessary because Spain was on the brink of collapse – indeed there was a bailout still being paid – and the euro was on the brink of collapse. It’s true: it’s also true that it was accompanied by a significant devaluation of wages, that labor relations were unequal to the detriment of workers, and that the extremely high temporality remained entrenched, contrary to the promises of its proponents.

The way out of the crisis is completely different this time. This is also the response from Brussels with payments in the tens of billions in subsidies and loans, which this time have been added to the monetary support of the ECB, although the wind has changed in Frankfurt due to high inflation.

Numbers tell stories. First, unemployment has fallen to 2008 levels, this time without a bubble. Second, jobs lost during the pandemic have long since been recovered, largely because they were never destroyed; Many jobs have been wintered thanks to the help of the ERTE, a real revolution that is making the Spanish economy more flexible to respond to crises. With this tool, the link between workers and companies has been maintained, which has made it much easier for the former to return to the same tasks. It can always be argued that the huge spending of public money on all the measures taken to cushion the blow of the pandemic has been key, although the Economy Ministry has already responded by telling the European Commission that in In the long term there will be savings because unemployment benefits will be paid out sooner and more taxes will be collected. And third, moreover, as this latest EPA shows, it’s the companies that have added staff over the past year; 54 employees are hired for each new official in the administration.

Now, like 10 years ago, there’s new labor reform after a crisis (in addition to a minimum wage hike that hasn’t corroborated the apocalyptic bias of some pundits). The latter retains a good deal of the 2012 framework, although it has also somewhat rebalanced the positions of employers and unions in collective bargaining and, above all, has opted to address temporality. The data the INE is showing this Thursday gives clear indications that it is achieving this. Up until 2022, it was common for the good seasons of the labor market to start in the spring, at the expense of a substantial increase in temporary contracts. This year the positive is preserved and the temporality decreases noticeably. 22.3% fixed-term contracts, yes, that’s still a high rate, but the reform has only been effective for a few months.

The text agreed by unions, employers and the government still has to pass many cotton tests. One of them is how it adapts to skinny cows, so whether internal flexibility works in companies. The decree, endorsed by Brussels, sought to capitalize on the ERTE’s success during the pandemic to create a similar structural mechanism. It’s very likely that the drums of war beating in Eastern Europe will soon give this latest labor reform a chance to stand the test of bad times.

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Source elpais.com

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