Divergence over employment policies lead to breakdown in social dialogue

Social dialogue is considered as having officially broken down in Spain. Only a year has elapsed since the social partners and the government signed a joint statement on consolidating social dialogue and viewing it as ‘one of the most important assets of our model of labour relations’. It appears, however, that the proposals of the employer organisations have caused an apparently irreconcilable rift with the government and trade unions, leading to a complete breakdown in dialogue.

Background

The first term of office of the socialist government after eight years in opposition represented a period of revitalising neo-corporate practices. In 2006, the government, the main employer organisations and trade union confederations signed an agreement to improve growth and employment. Signatories to the agreement were, on the employer side, 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). On the trade union side, they comprised the General Workers’ Confederation (Unión General de Trabajadores, UGT) and the Trade Union Confederation of Workers’ Commissions (Confederación Sindical de Comisiones Obreras, CCOO).

The agreement established important measures with the aim of consolidating a joint effort between the government and the social partners, in order to build a more secure employment model. This aim mainly materialised in the promotion of open-ended employment contracts, by offering incentives to companies in the form of reduced social security contributions for such contracts. In addition, the agreement provided for state subsidies to transform temporary employment contracts into open-ended contracts.

Social dialogue as a means to tackle the recession

After its first term of office and its re-election in 2008, Spain’s socialist government explicitly wished to maintain social dialogue as a strategy to deal with the challenges that the Spanish economy was facing in a period in which the first signs of economic recession could already be discerned. Thus, on 29 July 2008, the government and the social partners signed a joint statement acknowledging the critical situation of the Spanish economy. In this statement, the government and the social partners committed themselves, within the framework of social dialogue, to take action in the field of employment policies, training, collective bargaining, social protection, equal opportunities in employment and any other matter of relevance in order to support economic recovery.

Reasons for breakdown in social dialogue

However, one year following the joint statement, social dialogue is considered as having officially broken down, mainly due to the refusal of the trade unions and the government to accept measures that the employer organisations proposed. Basically, the trade unions and the government oppose the following two measures put forward by the employer organisations:

  • to reduce employers’ social security contributions by five percentage points, which according to the government would represent an annual cut of €17 billion, thus putting at risk the future of the Spanish pension system;
  • to establish a more flexible employment contract – defined as the ‘21st century contract’ by the employer organisations – with reduced compensation in the case of dismissal (20 days of compensation per year worked instead of the current 45 days) and a relaxation of fair dismissal protection; in view of the government and trade unions, such flexibility would only entail more dismissals and employment insecurity.

Both measures have led to a definitive breakdown in social dialogue, blown out of proportion by the mutual accusations between the government and the employer organisations. While the government has questioned the political independence of the employer organisations, accusing them of acting as a lobby for the conservative party (Partido Popular), the employer organisations have tried to defend themselves by accusing the government of acting like a ‘staunch supporter’ of the trade unions.

Pablo Sanz de Miguel, CIREM Foundation

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