Employment and social policy in the 1998 Budget

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The Spanish Government has presented an austere Budget for 1998 aimed at achieving the economic convergence required by the Maastricht Treaty. The trade unions and employers' organisations have reacted to the proposals with some criticisms regarding employment and social policy.

The Spanish Government has presented the General State Budget for 1998 at a time when the macroeconomic figures for 1997 seem to be very favourable: an inflation rate of 2.2%; a deficit of 2.9%; a growth rate of approximately 3.5%; job creation of 2.7%; and public sector borrowing reduced by between 1% and 2% in comparison with 1996. The Budget is an austere one, aimed at meeting the convergence criteria for EU Economic and Monetary Union set out in the Maastricht Treaty on European Union. At meetings with the Ministers of Economy and Labour, the trade unions have claimed that the Budget offers no strong measures aimed at creating employment, whilst the employers' organisations have demanded greater cuts in social security contributions for employers and in social policy.

Position of the trade unions

The unions have indicated their dissatisfaction with a Budget in which, according to statements issued by the general secretaries of CC.OO and UGT confederations Antonio Gutiérrez and Cándido Méndez respectively, "no commitment of sufficient importance is made in favour of employment". In other words, the Budget fails to take advantage of the favourable economic situation to promote employment. The unions point out in particular that: the proportion of unemployed people in receipt of unemployment benefit has been cut to reduce the public deficit, following the trend of the last few years (from 68% in 1993 to 43% at present); there are no investments that substantially increase job creation; it is not planned to maintain public employment by replacing workers who take retirement; and the 2.1% wage increase for civil servants is insufficient bearing in mind that in 1997 public service wages were frozen.

The unions also state that: the growth in the area of education is insufficient, particularly since there were large cuts in the previous year; taxation remains unchanged and tax rates maintain a non-equitable distribution of social contributions.

The unions also claim that not only is there no firm commitment to deal with employment in the Budget, but - although Spain has the highest unemployment rate in the Union - the Government is maintaining a low-key position on this subject for the November Luxembourg "Employment Summit" (EU9711168F). This is why UGT and CC.OO will continue to stress the importance of establishing more effective employment policies for Spain and for the Union and will try to convince the Prime Minister accordingly.

Position of the employers' associations

After initial reservations, the employers' organisations have by contrast shown a general agreement with the Budget, but they insist that social expenditure must be cut even further, particularly in the areas of health, education and unemployment benefit.

Furthermore, the chair of the principal employers' organisation, CEOE, José Ma. Cuevas, insists that there is a margin to reduce employers' social security contributions without endangering either the payment of contributory pensions or unemployment benefits. This would facilitate job creation according to the employers, and is one of the limitations that the employers see in the Budget.

Budget and employment plan

The Government, the opposition parties and the trade unions have all related the 1998 Budget to the Employment Summit and the efforts that must be made to create and improve employment. The Government has stated that in the current macroeconomic situation the social partners can negotiate labour flexibility, a reduction in working hours and productivity with a view to increasing and improving employment. Rather than following the October 1997 French and Italian initiatives of legislating for a 35-hour working week, then, the Government has placed the topic in the hands of the social partners (ES9711133F).

However, the Government is prepared to accept some proposals made by the Socialist opposition and the employers, in particular the proposal to reduce the employers' social security contributions in the course of 1998. The unions do not expect too much from this reduction and call for greater involvement by those who are able to create employment: they ask the employers to make a greater effort to face up to the main social problem in Spain, and they ask the Government to make more substantial investments and to provide greater support to unemployed people (whether in benefits, training or other active policies).


This is the first time that the trade unions have come out so clearly in favour of Budget measures that are committed to employment. But it is also the first year over the last decade in which they have shown themselves to be actively committed to negotiating aspects of the labour market that are directly related to job creation or improving job quality. Both these aspects are positive. But there are no mechanisms to guarantee that economic or other kinds of measures are put into practice. Bipartite monitoring commissions as laid down in the April agreement met for the first time only in November 1997, some seven months later (ES9711133F). Companies accept the tax incentives for recruiting staff but are reluctant to control overtime and continue to use certain types of contract illegally. It is once more becoming evident how hard it is for worker representatives to defend the demands of the workers in many companies. (Faustino Miguélez, QUIT)

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