Unions assess two years of conservative government in Spain

The conservative PP party celebrated two years in government in March 1998. It uses the slogan "Spain is going well" to describe its first term in office - a view shared, with certain reservations, by the regional nationalist parties that support the Government in parliament. The trade unions, on the other hand, call some of the Government's policies authoritarian, unfair and retrograde.

In March 1998, the conservative People's Party (Partido Popular) celebrated its first two years in government, which it describes with the slogan "Spain is going well" (España va bien). The regional nationalist parties that support the Government are broadly in agreement, but with reservations. The trade unions, however, have been far more critical, especially with regard to social questions and unemployment.

In the political arena, Prime Minister José María Aznar has won and maintained the support of the nationalist parties during his term of office. The People's Party Government and the nationalists agree on a fundamental question: the idea of the minimum state. This forms part of the "neoliberal" ideology of the Government, which aims to reduce the role of the state in the economy, to reduce public expenditure and to formulate a political model with less state intervention. The nationalist parties broadly support this economic policy and are also keen to reduce state intervention in order to decentralise government.

Moreover, Mr Aznar has improved his public image slightly, inspiring the confidence of 36% of citizens in recent opinion polls, compared with 22% in 1994. This may be due more to economic than political reasons, and in fact, when the Government argues that Spain is going well, it bases the statement on economic results.

Improvements in the economy

The improvement in the Spanish economy is related to the general recovery in the economy of the European Union. After going through a depression between 1990 and 1993, the Spanish economy has shown since 1994 a cycle of growth parallel to that of the other countries in its region. Economic recovery has been accompanied by the control of underlying imbalances, especially inflation, interest rates and the public deficit. For the government, a low level of inflation and low interest rates are a central element of the competitiveness of the Spanish economy. Thus, the annual rate of variation of the retail prices index is at a historic low of 2%, and the new financial conditions have permitted interest rates to settle below 5%.

The objective of liberalising the Spanish economy has been accompanied by a policy of privatisation of major public companies. This has in turn helped to fund the general state budgets and to reduce the public deficit. Hence the macroeconomic balance presented by the PP Government has been optimistic: a growth rate of 3.4% in gross domestic product (GDP) in 1997, compared with 2.1% in 1994, 2.8% in 1995 and 2.1% in 1996. This growth rate is due to the increase in domestic consumption, greater investment, the increase in industrial activity and the resurgence of the construction sector. In particular, government strategy has been aimed at promoting domestic demand, which increased by 2.7% in 1997 compared with 1.6% in the previous year. To accompany this recovery of domestic demand, an attempt has been made to reduce the insecurity caused by the high rate of temporary employment and to promote stable employment through an agreement between the trade unions and the employers (ES9706211F).

The (modest) creation of jobs must also be borne in mind. In 1997 about 371,000 new jobs were created. Though this figure is lower than that of the previous year, an optimistic reading could consider that the rate of growth has been superior to that of other EU countries in 1997.

In summary, the Government foresees stable and lasting growth. This optimism is also shared by the employers' associations - the Spanish Confederation of Employers' Organisations-Spanish Confederation of Small and Medium-Sized Enterprises (Confederación Española de Organizaciones Empresariales-Confederación Española de la Pequeña y Mediana Empresa, CEOE-CEPYME). Their main point of disagreement with the Government is over the reduction of fiscal burdens, but the employers approve of the policy of controlling the basic imbalances, which today places Spain amongst the first countries to meet the conditions of convergence for EU Economic and Monetary Union established at Maastricht.

Trade union criticisms

The attitude of the trade unions towards the conservative Government has gone through two phases. In the first year of the administration, the unions were not very critical, and even praised the Government's willingness to enter into social dialogue, in contrast with the final stage of the previous Socialist Government. A series of specific agreements and laws - covering the settlement of conflicts out of court (ES9705107F), employment security (ES9706211F), prevention of industrial risks (ES9803145N), continuing training (ES9702101F), agricultural employment and the Statute of the Civil Service (ES9803143F) - have reinforced the autonomy, responsibility and direct involvement of the social partners and have led to changes in the structure of collective bargaining. This may help to modify the pattern of labour relations, though perhaps at the expense of a decrease in the organisational and institutional protection of less organised workers.

However, despite their positive view of the social dialogue, the trade unions have also criticised the Government. They see the policies of the PP over the last two years as unfair in the current socio-economic environment and consider that they are based on a strong neoliberal ideology. In particular, three main points have met with the criticism of the trade unions: the national employment plan (ES9712235F); the tax reform (ES9803250N); and the cut in the list of drugs financed by the social security system (the so-called medicamentazo- ES9803251N)

In the second year, the trade unions increased their criticisms of the Government. Nevertheless, they recognise that more stable employment has been created than in previous years, and that the general framework of the economy has been favoured by an improving economic cycle in the European environment, leading to job creation as a result of the growth in GDP, fewer job losses in agriculture and the policies arising from the April 1997 labour reform agreements (ES9706211F).

However, one of the fundamental objectives of the April agreements was to promote secure employment and to reduce temporary employment, and it does not seem that these objectives will be reached (ES9801239F). The trade unions make three critical observations on the government's employment policy. Firstly, job creation has had a smaller effect on unemployment than in previous years. In 1997 the number of unemployed people fell by only 140,000 despite the higher growth rate, whereas the number fell by 173,000 in 1996 and by 198,000 in 1995. Also, today the unemployment rate is very high: 20.8% of the active population, of whom 1.8 million are long-term unemployed. Secondly, it has not been possible to reduce the rate of insecure employment. The rate of temporary employment has remained at 33%, the highest in the European Union. Thirdly, the Spanish Government has not adopted in full the employment guidelines agreed at the Luxembourg Employment Summit (ES9712235F). The trade unions claim that Spain's medium-term employment plan presented at the Amsterdam summit is no more than a summary of measures that were already underway (ES9709222N). They are therefore considering mounting a series of protests up until autumn 1998, and are demanding the introduction of a 35-hour working week to favour worksharing.

The trade unions have also criticised increasing social inequality, falling earned income, decreasing unemployment benefit and the tax reform project proposed by the PP Government. They feel that the orientation of socio-economic policy is especially unfair in the area of taxation, and that the Government's tax reform is aimed at consolidating an "unfair distribution of citizens' efforts" (ES9803250N). Today, 80% of IRPF (personal income tax), representing over 65% of all taxation, is paid by wage earners. The trade unions are therefore calling for a dialogue on tax reform. The current tax reform project carries the threat of future cuts in social expenditure (the medicamentazois a good example of this), and the unions and other social actors believe that earned income is seriously discriminated against in its fiscal treatment, in comparison with other types of income.

Commentary

Economic growth is more stable and firmly based than in the period of growth between 1986 and 1991 under the Socialist Government, when growth was based on the financial sector. The conservative Government, on the other hand, is aiming for growth based on industry and services, whilst trying to control and reduce the basic imbalances (which the Socialist administrations also helped to control). However, the conservative Government should not receive all the merit for the growth rate. Growth is also the result of the stage of the economic cycle in the framework of the European Union. Mr Aznar has arguably been lucky.

"Spain is going well", but only for certain sectors of society. Indeed, economic growth is not distributed on a basis of social or fiscal policy and is insufficient to absorb the high rate of unemployment. Fundamental questions such as structural unemployment for technological reasons have led to another debate: the reduction in working time and worksharing, which are increasingly important issues for the trade unions. Employers and the Government are reluctant to debate these measures. Furthermore, unemployment and temporary employment persist despite the measures taken to develop secure employment. The instability and lack of legal protection of this type of employment could involve a risk of greater job losses when the economic cycle turns downward. (A Martín Artiles, QUIT)

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