Spain's biggest unions called for mass protests across the country on Feb. 19 in response to labor-market changes the government announced this past Friday to lower the country's towering unemployment rate and spur economic growth.
"We want to raise a clamor in the streets of Spain against the labor-market reforms," said Ignacio Fernández Toxo, the head of Spain's largest union, in a news conference Saturday, although he stopped short of calling for a general strike. The overhauls, he added, "limit the rights of workers but offer no benefits for the people."
The government on Friday approved a decree that will, among other things, dramatically lower the cost of laying off newly contracted workers and facilitate company plans to reduce their workers' wages or dismiss them en masse.
"The reform will provide the framework to allow the creation of stable employment," Labor Minister Fatima Banez said Friday after the government's weekly cabinet meeting.
The decree will reduce the cost of an unfair dismissal associated with an open-ended contract to 33 days a year worked, down from 45. More importantly, it will make it easier for companies to justify a fair dismissal with a cost of 20 days. Economists and business leaders say high dismissal costs serve as a powerful disincentive to hiring.
The diktat also makes it easier for companies in difficulties to opt out of wage-bargaining agreements with unions and gives priority to company-level wage agreements over sector-level or national accords. It also offers a series of new tax incentives to encourage the hiring of unemployed youth.
The government says the overhauls will help spur hiring at a time when Spain's unemployment rate is nearly 23%, the highest in western Europe, while close to half of all youth looking for work are jobless. Spiraling unemployment, along with a runaway budget deficit, has spooked investors and sent Spain's borrowing costs shooting upward.
Prime Minister Mariano Rajoy, who came to power in December, has made labor-market overhauls, along with a cleanup of Spain's ailing banks and draconian budget cuts, a key element of its push to shore up the economy.
Spanish gross domestic product shrank by 0.3% in the fourth quarter of last year from the third in what is expected to be the beginning of a downturn that will likely bring more unemployment.
José Ramon Pin, management professor at the IESE business school in Madrid, said these changes were "a very important step" but that they don't go far enough. These labor costs will still remain higher than European averages.
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