Monday, February 26

The labor reform, known in Brussels as component 23 of the recovery plan and worth 10,000 million

The PP deputy Alberto Casero may not know. But his mistake in voting in favor of the labor reform in Congress is key so that Spain can receive 12,000 million euros by mid-year, of which 10,000 depend on the labor market reform validated this Thursday by a single vote in The deputies congress. To receive a good part of those millions in the next six months, the labor reform must have passed the parliamentary process, which has just happened, and be consistent with component 23 of the national reform and resilience plan, that is, with what was agreed between Brussels and Labor as guidelines for this labor reform.

Brussels called for a reform that combined security and flexibility and that tried to tackle the endemic problems of the Spanish labor market: duality, temporary employment, youth unemployment and inequality between men and women. But the European Commission still asked for more: that the reform came after an agreement with the social partners. And the Government promised to have it approved in the Council of Ministers before December 31, and it was.

But it is of little use to approve a decree in the Council of Ministers if it does not go through Congress afterwards. So those 10,000 million depended on the vote this Thursday, which the Government has saved thanks to the error of the deputy Casero. His fellow ranks went from euphoria to stupefaction. But for the Spaniards that mistake is worth billions.

From the beginning, the European Commission has sent positive signals about the labor reform. First because of the method – social dialogue – and then because of the content.

This same Monday, a letter from the President of the European Commission, Ursula von der Leyen, to the President of the Government, Pedro Sánchez, was known, in which she said: “We applaud that Spain continues with the reforms, such as that of the labor market. I am looking forward to continuing the good and fruitful collaboration for the implementation of the Spanish recovery and resilience plan.”

An official spokesperson for the Community Executive explained the context of that letter from Von der Leyen to Sánchez and his good words: “On January 25, 2022, President Von der Leyen sent a letter to the President of the Government Pedro Sánchez in response to another of this one on December 27 to thank Spain for the presentation of the progress report on the implementation of the Recovery and Resilience Mechanism in 2021; to congratulate Spain for having reached the first 52 milestones linked to its first payment request; and to praise the progress of Spain in the reforms, including the reform of the labor market (in response to Prime Minister Sánchez’s reference to the agreement with the social partners reached at the end of December 2021)”.

Moreover, on the same day that Von der Leyen’s letter left Brussels, on January 25, the Finance Commissioner, Paolo Gentiloni, responded to the PP MEP Isabel Benjumea in the European Parliament’s Economy Commission: “Now we are starting the evaluation of new reforms and objectives, of course in the labor market and pensions. I am not going to go into details because the evaluations are starting now. But, of course, I tell you that we support the agreements reached with the social partners and the different actors involved [como es el caso de la reforma laboral pactada entre Gobierno, CEOE y sindicatos]Gentiloni emphasized.

A week before Gentiloni’s response to the PP in the European Parliament, the first vice president, Nadia Calviño, anticipated after a Eurogroup the good feelings in the European Commission in relation to the labor reform.

“The preliminary assessment of the European Commission on the Spanish labor reform is positive,” he said about the initial verdict of the Community Executive on the text agreed between the Ministry of Labor of Vice President Yolanda Díaz and the social agents: “It is a reform balanced, the result of an intense and long negotiation process with business and worker representatives. It is not only the result of a broad agreement with the social agents, but also includes the recommendations that international institutions have repeatedly made to us”.

Indeed, a week after the agreement between the Government, trade unions and business organizations for the reform of the labor market was announced, and 48 hours after the proposal was approved by the Council of Ministers, the European Commission was already holding the pact reached.

“While the European Commission has supported the Spanish government in its efforts to reach an agreement with the social partners on labor market reform, we of course welcome the fact that such an agreement has been reached,” explained a spokesman for the Community executive to

The labor reform is one of the commitments of the Spanish Government within the European recovery mechanism, for which the Government has been awarded 140,000 million euros until 2026, although the Executive, for the time being, has only requested the 69,500 corresponding to transfers and grants.

At the moment, Spain has already received in 2021 the 9,000 million corresponding to the pre-financing (13%) and the 10,000 million of the first tranche itself – the transfer was made on December 27 last.

The regulation of European funds implies that the European Union releases the money every six months if a series of milestones and objectives have been met – reforms, investments, parliamentary procedures. In this way, the Government’s commitment was to approve the labor reform in the Council of Ministers before the end of 2021 and to enter the request for the 12,000 million in the first half of 2022.

To receive a good part of those 12,000 million in the next six months, the labor reform must have passed the parliamentary process and be consistent with component 23, that is, with what was agreed between Brussels and Labor as the main lines of that labor reform.

And this is what Brussels will evaluate to release the money, which meets the milestones and objectives committed to in component 23 of the Spanish recovery plan delivered to the European Commission last April.

At the moment, the agreement between the Government, unions and business organizations ratified by Congress complies with what was agreed with Brussels, according to the signatories of the pact. Why? “Because it recovers the central role of collective bargaining, reinforcing the power of union organizations”, explain sources of the negotiation: “The ultra-activity of the agreements is recovered, which was one of the main demands of the metal workers of the bay of Cádiz; repeals the prevalence of the company agreement in salary matters; and changes of the first magnitude are undertaken in the contracting model to combat temporality and precariousness, the two great evils of the labor market in Spain”.

In this sense, Brussels has always supported the framework of social dialogue, as it appears in its evaluation of Spain and as the Government has committed to in its recovery plan. “Reform that addresses labor market segmentation is traditionally one of the top recommendations,” explained the European Commissioner for Finance, Paolo Gentiloni, on a recent visit to Madrid: “We are going to look at the legislative proposal, the decisions of Parliament. But I think that the method that the Government chose to try to build this proposal through dialogue with the social partners is a good method. When you have reforms, especially delicate reforms, if you can get the support of the social partners, this gives your proposals extra strength”.

In a recent interview with El Paisthe European Commissioner for Finance stated: “The labor market has traditionally been a problem in Spain, with many differences between the most protected workers and those who are least protected. The path chosen by Spain to negotiate with the social partners is a good decision. The tip [los Gobiernos de los 27] approved the plan and in the labor market requested that the modernization of collective bargaining and the reorganization of contracts be carried out achieving a balance between security and economic dynamism. It is not something subjective. They are the decisions of the Council that accompanied the approval of the Spanish plan which, by the way, is the largest in volume of subsidies, even more than the Italian one”.

In this sense, Brussels stresses that “the plan [del Gobierno español] includes measures to reduce the high proportion of temporary contracts and reinforce active labor market policies that are expected to improve its functioning” and trusts that it “helps to address the existing fragmentation of unemployment protection, the provision of relevant skills and qualifications for the labor market that should accompany the country’s green and digital transition”.

Brussels is confident that the overall package of labor market reforms “strikes the right balance between flexibility and security.”

The recovery of collective bargaining buried by Mariano Rajoy’s labor reform, the permanent internal flexibility mechanism (structural ERTE) and employment stability, for example, are some of the aspects of the reform negotiated with unions and employers.

In this sense, Brussels “expects that most of the components of the plan will contribute to smart, inclusive and sustainable growth. A significant number of components contribute significantly to social and territorial cohesion, mainly through measures to address the challenges in the labor market and improve employability, investments in social inclusion and improvements in the deployment of public services and infrastructure throughout the territory”.

“Aggressive reform”

This Thursday’s vote leaves behind the labor legislation of the PP. When he came to power, the PP launched a second wave of reforms after the European adjustments approved in 2010 with José Luis Rodríguez Zapatero in government. In February 2012, a camera caught then Economy Minister Luis De Guindos telling then European Finance Commissioner Olli Rehn at a Council of EU Economy Ministers in Brussels: “Tomorrow we will approve an extraordinarily aggressive labor reform”.

The coalition government agreed on a program that compromised a reform of the labor market that included the dismantling of Rajoy’s regulations, which, in addition to not removing Spain from the podium of EU countries with the most unemployment, has taken touches attention from the European Commission for being so damaging to collective agreements.

Is it the reform that Brussels wants? “Honestly, I think so,” replied the vice president Yolanda Díaz during her visits to the community capital: “If you look at the unemployment and temporary and precarious data throughout the Spanish democracy, in its historical series, it is difficult to explain that throughout these 40 years the dynamics had not changed. We are going to try and this is the objective of the reforms. The social agents know the scope of the reforms and I thank them because they are up to the circumstances They share the diagnosis and they know well that we have a lot of work to do to finally change the Spanish labor market as a whole”.

“For the first time, Spain has made a commitment with Europe to deal with the problems of temporary employment and precariousness”, they explain in Trabajo, “and it is one of the elements of the key structural reforms of the labor market component. Spain assumes the commitment to mitigate in its labor system all the devices that have given rise to this enormous rate of temporary work”.