Social partners make proposals for 2000 state Budget

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Over August and September 1999, trade unions and employers aired their views on Spain's forthcoming state Budget for 2000. Employers' proposals included a call for a cut in social security contributions, while employers focused on issues such as unemployment cover and pension increases. The government has largely maintained its positions, though apparently some concessions will be made.

During June 1999, Spain's two main trade union confederations, CC.OO and UGT, expressed their interest in participating in drawing up the state Budget for 2000, and requested discussions during July. This initiative came in the light of the government's unilateral drawing up of the 1999 National Action Plan (NAP) on employment (ES9907239F). Two days before the end of July, the Minister of Economy, Rodrigo Rato, and the Minister of Labour, Manuel Pimentel, received the general secretaries of CC.OO and UGT, Cándido Méndez and Antonio Gutiérrez, and - separately - the chair of the CEOE employers' confederation, José María Cuevas. August and September saw conflicting declarations by representatives of the social partners (and the political parties) as the date for the approval of the 2000 Budget approached.

Social partners' proposals

CEOE has requested a continuation of the current austerity policy in the new Budget and repeated its demand of the past few years for a general reduction in employers' social security contributions. It also calls for an increase in tax aid for the innovation and internationalisation of companies.

Both CC.OO and UGT, along with most political parties, request first and foremost an increase in the minimum pensions (contributory and non-contributory) (ES9909248F). Second, they demand the extension of the right to unemployment cover (ES9810183F) and an increase in the amount of benefit (especially for the long-term unemployed people, those who support families and those over 45 years who have no other protection). Third, they request an increase in programmes that link training and employment aimed at specific groups (women, young people and the long-term unemployed). Fourth, they call for promotion of, and support for, job creation through the reduction and reorganisation of working time. In general, the unions demand an increase in the funds assigned to the National Employment Institute (Instituto Nacional de Empleo, INEM) and a balanced distribution of concessions to employers and the unemployment protection system. They also seek a commitment to reduce temporary employment in the public sector and a wage increase for civil servants.

Although with different objectives, the trade unions and the employers' confederation both want the sources of funding of the social security system to be separated. At present, the contributions of employers and workers to the system pay for unemployment cover, support active employment policy programmes and pay for supplements to the minimum pensions. According to CEOE, employers and workers contribute ESP 900 billion for non-contributory benefits, which the state should pay through tax revenue. The employers hope that if the sources are separated, the surplus will be used to reduce contributions, while the trade unions wish to use the surplus to increase unemployment cover.

The government's position

The government claims that its budget priorities are to: provide decisive support for active employment policies and increase the purchasing power of pensions; improve health and education; invest in new infrastructures and justice; promote research and development; and extend the professionalisation of the army. It continues to rule out a general reduction in social security contributions and will continue its policy of selective reductions for permanent recruitment, particularly for certain groups (it will increase grants for the recruitment of workers over 45 years old, thus fulfilling the commitment made in the "April agreements" of 1997 - ES9706211F). Likewise, the government completely refuses to meet the union demands for wider unemployment cover and incentives for shorter working hours.

The two months of conflicting declarations in the media by the social partners (and above all by the political parties) seem to have influenced the government, which has announced that it will include some of the demands mentioned above in its budget proposal. It seems that the government will increase pensions beyond the rise in the retail prices index and that it will fulfil its commitment to set up a reserve fund for the pensions in order to attenuate the effects of the economic cycles - a commitment that it made four years ago through the Toledo Agreement (ES9710220F). It has also made new commitments for state Budgets starting from 2001. It seems that the government will accept the non-contributory nature of the supplements to minimum pensions and is willing to finance them through taxes, providing the transfer of sources is gradual. It has also left the door open for a general reduction in employers' social security contributions if employment continues to evolve positively.

Commentary

Regarding employment (active and passive policies) the positions of the social partners remain unchanged. The new Budget may fail to resolve the differences between the government and the trade unions raised by their different approaches to solving unemployment.

It seems that the 2000 Budget will be a continuation of the previous one (ES9810286F) and offer no new solutions to the problems of the Spanish labour market and the conditions of life in Spain. The high proportion of new temporary contracts and the high rates of unemployment among young people and of long-term unemployment - problems that are also raised by the European Commission report on the 1999 Spanish NAP - have still not been assigned the specific funds that seem necessary in order to eradicate them.

Nevertheless, some items may change between now and the approval of the Budget because of the exceptional situation of the pre-electoral period (Clara Llorens Serrano, QUIT-UAB).