BBV bank calls for further labour market reform
In February 1998, BBV - the second largest banking group in Spain - called on the conservative Government to progress further with labour reform, reduce the cost of dismissal and continue to reduce public expenditure in order to meet the challenge of the single European currency.
The Spanish banking sector is generally in favour of a "neo-liberal" economic policy. At its shareholders' meeting in February 1998, Banco Bilbao-Vizcaya (BBV) - the second-largest banking group in the country - demanded deeper labour reform, a reduction in the cost of dismissal and greater wage moderation. BBV had increased its profits by 26% over the previous year.
The final document presented by the president of BBV to the shareholders' meeting also proposes that structural reforms should be taken further. In particular, it asks for a reform of the pension system, which has to support a growing burden because of the ageing population. The document also calls for a permanent reduction in expenditure and public borrowing, and for fiscal reform to favour "the creation of wealth and employment". It describes the trade unions' proposals for shorter working hours and worksharing as simplistic, stating that they would only increase labour costs and reduce the competitive capacity of the banking sector. The unions, on the other hand, consider that it is not the time to propose another labour reform or to extend the present one, which was put into practice only in April 1998 (ES9706211F).
The BBV document envisages that the future absence of a national monetary policy will lead to the predominance of the market economy and the need for structural reforms that will give the economy greater labour flexibility. It must be borne in mind that the Spanish banking sector was one of the great beneficiaries of the protective policies of the Franco regime. In the transition period, and particularly in the 1980s, it underwent an important process of concentration. However, the prospect of EU Economic and Monetary Union and the introduction of the euro single currency suggests the need for still greater financial concentration, the search for new markets and the extension of existing ones. This has led to an incipient process of alliances and coalitions between small banks and savings banks, as well as a major process of modernisation in order to face competition.
Lastly, according to the BBV, the euro will have a negative effect in the short term due to lower business margins, but a positive effect in the medium and long term. Indeed, this prospect of falling business margins, possible coalitions and restructuring is leading the unions to fear for the future of employment in the banking sector.