2001 Annual Review for Spain

This record reviews 2001's main developments in industrial relations in Spain

Political developments

The political framework remained stable during 2001. The absolute majority achieved by the conservative People's Party (Partido Popular, PP) in the 2000 general election has allowed it to govern with a fair degree of tranquillity. The most important political event of the year was the regional election in Galicia, which returned the People's Party with an absolute majority.

Collective bargaining

Collective bargaining covered around 80% of Spanish workers in 2001, a very similar figure to that of previous years. The structure of bargaining was also similar to that of previous years: it was neither centralised nor decentralised, but, rather, fragmented and could therefore be characterised as'mixed'. This mixed structure of collective bargaining has been the subject of lengthy discussions between the government and the social partners, but attempts at reform failed in 2001 (ES0107150N). Regional sectoral agreements dominate bargaining (53% of all accords), whereas national sectoral agreements are less important (28% of accords) - see table 1 below. The structure of collective bargaining still lacks articulation and results in considerable overlapping, which leads to a lack of legal certainty in some cases.

Table 1. Structure and levels of collective bargaining, 2000
Type of agreement No. of agreements No. of companies covered No. of workers covered
Company 2,899 3,049 902,874
Provincial sectoral 932 678,592 4,115,887
Local sectoral 14 622 5,112
Inter-provincial sectoral 29 76,011 572,958
Regional sectoral 28 75,716 571,441
Inter-regional sectoral 1 295 1,515
National sectoral 71 219,052 2,265,983
Total 3,946 977,326 7,862,814

Source: Economic and Social Council (Consejo Económico y Social, CES), Memoria sobre la situación socioeconómica y laboral, 2001.

On the one hand, collective bargaining is showing a tendency towards decentralisation through company agreements (complementary to collective agreements) that have no legal status and are therefore not reflected in the official figures. On the other hand, however, it shows a tendency towards centralisation, as witnessed by the conclusion of new national sectoral agreements and a reduction in local and county-level bargaining.

In the debate on reforming collective bargaining, the social partners agree on one point: the structure must be simplified in order to focus primarily on national sectoral agreements and company agreements. The difference between the social partners lies in the type of articulation between the levels and in the topics that should be negotiated at each level (ES0107152F). Some aspects of the bargaining system were addressed in an intersectoral'agreement for collective bargaining 2002' (Acuerdo para la Negociación Colectiva 2002), concluded by the main trade union confederations and employers' organisations in December 2001 (ES0201207F). Alongside its pay provisions (see below under'Pay'), this agreement contains recommendations to facilitate the negotiation of collective agreements. These cover: not delaying the start of the bargaining process; drawing up written proposals, particularly on difficult points in bargaining; and resorting to systems for resolving disputes out of court (ES0104238N) when substantial differences arise that are an obstacle to the bargaining process.

The main topics of Spanish collective agreements are employment, pay, working time and some'qualitative' issues. These topics have shown a tendency to change in recent years, and there are some interesting new features as set out below.

Pay

The tendency towards wage moderation experienced in previous years continued during 2001. Pay increased by an estimated 3.7% in 2001, compared with inflation of 2.7% - see table 2 below. One new feature is the increasing presence in collective agreements of wage revision clauses which guarantee maintenance of purchasing power if inflation rises above forecast levels. Trade unions see these clauses as an attempt to make up for loss of purchasing power over the past few years. The real value of the national minimum wage has also declined (ES0201249N).

Table 2. Pay increases and inflation, 1999-2002.
. 1999 2000 2001 2002 (forecast)
Pay increase in collective agreements 2.7% 3.7% 3.7% * 2%-3%
National minimum wage 1.8% 2.0% 2.0% 2.0%
Retail Prices Index 2.4% 4.0% 2.7% 2%-3%

*Provisional figures.

An important pay-related development which took place at the end of 2001 was the conclusion of the intersectoral'agreement for collective bargaining 2002', in which the main trade union confederations and employers' organisations recommend wage moderation (ES0201207F). The accord lays down no fixed figure for pay increases in 2002, but recommends taking as a reference point the inflation forecast (2%), plus the increase in productivity (calculated at a national average of 1.1%). In exchange for wage moderation, there is a commitment to maintain employment and a call for responsibility by employers in fixing prices so as to help reduce inflation (see below under'Job security'). The pact will be in force for one year, and is highly significant because the last intersectoral accord on pay was signed in 1986

Working time

There was a modest collectively-agreed reduction in working time in 2001 - average agreed annual working hours stood at 1,758.2 in 2001, compared with 1,761.7 hours in 2000. A 35-hour week was introduced in small number of collective agreements, particularly in the regional public administration and in public services. However, this was rarely linked to the creation of new jobs.

Many collective agreements have also increased working time flexibility. Working time has become a way of adjusting the workforce through a'quantitative' approach to flexibility management. Of particular importance are clauses on the annual calculation of working time (68% of relevant agreements mention this), irregular distribution of working time over the year, and employee availability. There has also been an increase in the number of agreements that compensate overtime with time off (56% of agreements), which helps to reduce labour costs. A notable example of an agreement on flexible working time arrangements was concluded at theDelphi Diesel Systems plant at St Cugat del Vallés in January (ES0101231F).

Job security

One of the most significant features of collective bargaining during 2001 was the major presence of employment as an issue of bargaining: around 83% of collective agreements contain clauses referring to employment. The conversion of temporary contracts into permanent ones seems to have lost momentum, possibly because, from 2000, reductions in social security contributions for the conversion of temporary contracts into permanent ones were discontinued. On the other hand, there are more clauses regulating the use of temporary recruitment or limiting the use of temporary employment agency workers. Some of these clauses even establish a maximum ratio of temporary contracts to permanent contracts in companies or provide for compensation for employees at the end of temporary contracts. Compulsory retirement is gaining ground in collective agreements, but is rarely combined with'hand-over contracts' (allowing older workers to take partial retirement with a new part-time employee filling the hours vacated).

Agreements that include clauses on increasing the workforce or maintaining jobs are still few. However, the intersectoral'agreement for collective bargaining 2002' signed in December 2001 (ES0201207F) seeks to exchange wage moderation for commitments to maintain jobs. The pact also recommends employers to recruit young people, women and persons over the age of 45 (who are eligible for reductions in social security contributions). It was also agreed to avoid the abuse of temporary employment, of which Spain has the highest rate in Europe (31%). The agreement includes alternatives to'quantitative' workforce flexibility (ie hiring and firing), such as internal flexibility, functional mobility between occupational groups, suspension of contracts, and shorter working hours instead of dismissal and uncushioned redundancies.

Training and skills development

In December 2000, the main central employers' organisations and trade unions signed the third National Agreement on Continuing Training (Acuerdo Nacional de Formación Continua, ANFC) (ES0101130F), which was implemented during 2001. The agreement provides for the extensive involvement of the social partners in managing all levels of the continuing training system. It also provides for the creation of a new Tripartite Foundation for Training in Employment (Fundación Tripartita para la Formación en el Empleo) to administer the system, which was approved by the government on 1 June 2001 (ES0109202F)

Other issues

In April 2001, a new Pact on Pensions (Pacto de Pensiones) was signed by: the Prime Minister; the most representative national employers' confederations - the Spanish Confederation of Employers' Organisations (Confederación Española de Organizaciones Empresariales, CEOE) and the Spanish Confederation of Small and Medium-sized Enterprises (Confederación Española de la Pequeña y Mediana Empresa, CEPYME); and the Trade Union Confederation of Workers' Commissions (Comisiones Obreras, CC.OO). The accord provides for enhanced funding and for improved conditions for pensioners in areas such as early retirement, minimum benefit levels and widows' benefits. The General Workers' Confederation (Unión General de Trabajadores, UGT) did not sign the agreement.

In January 2001, all the main union confederations and employers' organisations renewed their national agreement on resolving labour disputes out of court, signed in 1996. The revised agreement will remain in force until the end of 2004 (ES0104238N).

Legislative developments

Two important laws were passed in 2001. The first was Law 12/2001 on Urgent Measures for the Reform of the Labour Market (Ley de Medidas Urgentes de Reforma del Mercado de Trabajo) aimed at increasing employment and improving its quality, which limits temporary recruitment slightly and fosters part-time employment. This law emerged after the failure of the negotiations to reform the labour market, and temporary recruitment in particular (ES0103237F).

The second was the Organic Law on Universities (Ley Orgánica de Universidad), which reforms the process of recruitment of teaching staff and led to a major wave of demonstrations by students and lecturers. This controversial piece of legislation was passed by parliament in late 2001 (ES0111210F).

The organisation and role of the social partners

There were no major changes to the organisation and role of the social partners in Spain during 2001. However, unions and employers' organisations were very active during the year, giving their views on a range of government policies and negotiating agreements on some social issues. In April 2001, they gave their opinion on the government's National Action Plan (NAP) for employment (see below). While agreeing with the government's assessment that unstable employment was a priority, they had different views on how to tackle this issue (ES0106246F).

In the early summer of 2001, the government consulted the social partners over a reform of collective bargaining (ES0107150N). The social partners gave their views on this issue (ES0107152F), although no agreement could be reached on concrete reforms during the year, apart from some limited measures included in the intersectoral'agreement for collective bargaining 2002' (see above under'Collective bargaining'). Other areas where social dialogue involving the national-level social partners ran into difficulties over the year included civil service pay, social security and labour market reform (ES0109207N), though agreements were reached on pensions and bargaining in 2002 (see above under'Collective bargaining').

Industrial action

There was a low incidence of industrial conflict in 2001, although there were some significant disputes in the service sector, such as a bus strike in Barcelona (ES0101227N), and protest actions by public employees (ES0107149N) related to a ruling by the National Court (Audiencia Nacional) against a government-imposed wage freeze for civil servants (ES0102233F). A number of demonstrations and strike action over a new collective agreement in the telemarketing sector were also significant, both due to the high level of temporary employment in this sector and because it is a relatively new sector that has recently been growing (ES0107251N).

In the industrial sector, there were three significant disputes. A long dispute atSintel, the bankrupt telecommunications networks installation company, made a considerable impact in the media (ES0107148N) and ended with the intervention of the government and the redeployment of part of its workforce to other companies in the telecommunications sector, with the aid ofTelefónica (ES0111102N). Another major dispute, lasting five months, was that atFord over a new collective agreement (ES0111211F). In April, a one-hour general strike in Catalonia and the Basque Country against the industrial accident rate mobilised in particular the construction sector (ES0105241N).

National Action Plan (NAP) for employment

The2001 National Action Plan (NAP) for employment presented by Spain in response to the EU Employment Guidelines was severely criticised by the trade unions and slightly less by the employers (ES0106246F). The NAP was, according to the social partners, not negotiated, as the government informed and consulted the social partners after it had been formulated. The employers' organisations, and particularly the trade unions, therefore considered the process of information, consultation and bargaining to be very unsatisfactory.

Nevertheless, the Ministry of Labour claims that there was participation by the social partners. It maintains that the procedures for drawing up the NAP for 2001 followed the same lines for participation of the social partners, regions (autonomous communities), local authorities and other social and labour institutions and associations as the Plan for 2000. However, according to the trade unions and employers' organisations, information meetings only were held relating to the 2001 NAP.

The presentation in April of the 2001 NAP led to an evaluation of the previous Plan. The social partners found several positive aspects in this evaluation, such as the policy on equal opportunities and the identification of unstable employment and the reduction in long-term unemployment as priority problems.

The employers' organisations are pleased with the NAP measures concerning equal opportunities. CEOE and CEPYME are in favour of some measures laid down in the 2000 and 2001 NAPs, such as the promotion of a nurseries plan, the creation of support services for families and workers with adult dependants, and programmes of vocational training and guidance for women with unshared family responsibilities. Nevertheless, they consider that more specific measures are needed in terms of equal opportunities policy.

Overall, the trade unions were far more critical of both the procedure and the content of the NAP for 2001. In the view of CC.OO and UGT:

  1. the procedure for evaluating the execution of the previous year's NAP was incorrect;
  2. there was no negotiation over the NAP with the social partners, but they were merely informed and consulted on the content of and modifications to the Plan; and
  3. the NAP fails to confront the serious problems of the Spanish labour market. The fundamental problem continues - the rate of temporary recruitment is the highest in Europe. One out of three workers has a temporary contract.

The social partners's evaulations and proposals indicate three shared concerns:

  • the identification of unemployment and temporary employment as the priority problem. However, the partners disagree on the strategy to follow in response. The employers in particular insist on the need for greater flexibility in part-time contracts. The trade unions, on the other hand, consider that the main problem is the successive use of temporary contracts;
  • consensus on the need to improve coordination on employment between the three levels of public action - ie the the central administration, the autonomous communities and the local authorities. The National Institute of Employment (Instituto Nacional de Empleo, INEM) is already working in this direction to improve the employment services. The social partners are critical of the current situation of low coordination and overlapping of actions related to the NAP; and
  • the trade unions and the employers' organisations agree with the Ministry of Labour that that the NAP has not stimulated social dialogue and social concertation, as these existed previously. On the other hand, it has led to greater participation and involvement of the autonomous communities and the local authorities.

There has also been a greater level of agreement (and even a positive appraisal) on some priority contents of the NAP, such as equal employment opportunities for men and women (see above), increasing activity and occupation rates of women, attempting to reduce unstable employment, and reducing long-term unemployment.

Company restructuring

In late 2001, Spanish companies were feeling the effects of the economic slowdown. This took the form not so much of direct effect, but but rather a'crisis of expectations' (ie concern about the future, rather than the current situation), which meant that there were no radical workforce reduction measures (ES0112242F). However, the Survey of the Active Population (Encuesta de la Población Activa, EPA) showed a fall in the rate of job creation, from 4.24% to 1.80% between 2000 and 2001.

Large-scale redundancies in 2001 were largely limited to sectors such as airlines, which were directly affected by the terrorist attacks on the USA of 11 September. More generally, the policy of workforce adjustment has been carried out in three ways: non-renewal of temporary contracts; early retirement from as early as 52, without replacement by young workers (as widely used in the banking sector); and the introduction of greater flexibility in working time (see above under'Working time').

The airlines, which were the firms most affected by the economic downturn in 2001, began to make redundancies.Iberia prepared a workforce adjustment plan that will affect 2,526 workers (8.6%) out of the total workforce of 29,124 (ES0112243F), whileAir Europa planned to make 450 of its 3,000 employees redundant.

Telecommunications companies also seemed to be suffering the effects of the downturn, although their problems date from before 11 September and are related to the heavy debt that they incurred with the purchase of expensive'universal mobile telephone services' (UMTS or'third-generation' mobile telecommunications) licences. The motor manufacturing industry also felt the effects of the economic slowdown, with companies reducing production and stopping overtime (ES0109205F).Nissan introduced a redundancy procedure affecting 4,000 workers during 2001 (ES0101231F). The construction sector, which has been very dynamic in recent years, was also beginning to show signs of deceleration among its small and medium-sized enterprises.

Employee participation

There were no major developments during the year in the area of employee participation. The new EU information and consultation Directive (formally adopted in February 2002) has not engendered a great deal of debate in Spain as current provisions governing employee representation and information and consultation rights largely comply with the provisions of the new Directive.

New forms of work

Temporary employment is one of the main characteristics of the Spanish labour market. Despite a range of incentives at their disposal, employers continue to prefer to conclude fixed-term and temporary contracts with their employees rather than employing them on an open-ended basis. This was a central theme addressed by the social partners in their discussions on labour market reform during the year. However, they could not agree on measures to encourage open-ended contracts and the government issued its own reform (ES0103237F). Although this reform contained a range of measures, it was felt in some quarters that it did not directly address the problem of temporary work and fixed-term contracts.

Statistics looking at the link between precarious employment, gender and age were released in the late summer of 2001 (ES0109201F). These found that the impact of temporary employment is distributed unequally between men and women in favour of the former in both the public and the private sector. However, the distance between the two sexes in relation to temporary employment is lower than that observed for other'atypical' forms of employment, such as part-time work, and far lower than that observed for forms of'non-employment' such as unemployment and inactivity.

Outlook

2001 was set to be a year of reforms in the labour market, in the system of social protection and in collective bargaining. However, the parties failed to reach consensus on these issues. The negotiations failed and the reforms have in some cases been imposed unilaterally by law.

The outlook for 2002 is that the Spanish economy will decelerate, which will involve a high risk of vulnerability for temporary workers. However, the deceleration in the Spanish economy is interpreted by the government and the social partners as a'crisis of expectations', rather than a real crisis. In fact, there are other indicators that show that the Spanish economy (with a growth rate of between 2% and 2.5% forecast in the'stability programme' for 2002) can still continue to create employment. The number of workers contributing to the social security system is still growing, which shows continuing growth in employment despite a more moderate forecast for 2001.

As noted above, under pressure from the government, the central social partners ended 2001 by signing an agreement setting guidelines and criteria for lower-level collective bargaining in 2002, including pay increases linked to inflation and productivity gains, and a focus on employment and health and safety.

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