IMF asks Spain for greater flexibility in the labour market

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In late 1997, the International Monetary Fund once more asked Spain for greater flexibility in its labour market, but stated that it should be based on social dialogue. The Prime Minister and several of his ministers have stated their support for the introduction of such a new reform, but the trade unions are radically opposed to any changes until the results of 1997's "April agreements" have been analysed.

In its annual report issued in late 1997, the International Monetary Fund (IMF) has once more stressed the labour market issues that it has traditionally highlighted when analysing the development of the Spanish economy. It has again requested greater clarification of the reasons for dismissals and a reduction in their cost. The need to increase part-time employment is stressed, and greater flexibility in wage bargaining is proposed. The IMF also recommends that unemployment insurance should be reformed and that training for unemployed people should be more suited to the labour market.

The Prime Minister and several of his ministers have expressed their approval of this new proposal to the employers' organisations. They have stated that the labour reform has only just begun, since a full revision of the functioning of the labour market was one of the its electoral commitments. However, the Prime Minister has stressed that this reform must be led by agreements between the social partners - this was the approach taken in the 1997 labour reform (ES9706211F), or "April agreements", though in that case the social partners knew that if they did not reach an agreement in a few months the Government would legislate on the matter. As in other structural reforms that it considers essential for the modernisation of Spain, the Government would like this new reform to follow a line of maximum liberalisation. Its intention is therefore that an agreement should lead to few commitments that must be translated into laws or regulations.

The opposition - in particular the Socialist Party- has responded to these government statements by declaring that it is not prepared to accept any other further labour market reform agreements until the Government has fulfilled the recommendations on employment of the November 1997 Luxembourg Employment Summit (ES9712235F). This position is important in the light of the fact that all the groups (except the United Left party, Izquierda Unida) voted for a text in the Chamber of Deputies that accepted the social partners' earlier agreements. This near-unity was an important achievement by the government.

The CC.OO and UGT trade union confederations have totally rejected any further reform of the labour market until there has been sufficient time to see the results of the April agreements. In December 1997, as was anticipated in the agreements, the social partners discussed the first assessment of their effects. Furthermore, the unions are currently more in favour of active employment policies than changes in the types of employment contract and dismissal as a means to create new jobs. Because of this, a new reform of the labour market, at least a negotiated one, does not seem too feasible in the short term.

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