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The disastrous labor and social reforms in Spain
Spain, under pressure from the Troika (International Monetary Fund, European Commission and European Central Bank) has gone through three major labor market reforms, presented to the public as necessary in order to reduce the scandalous high level of unemployment: 25% in general and 52% among the young.
Spain (and Greece) are on the top of the unemployment league. Since the beginning of the crisis, both the socialist (PSOE) and conservative (PP) governments have pursued reforms aimed at what they called ‘deregulation of the labor market,’ assuming that the problem of high unemployment was created by too many labor market rigidities. It was said that labor unions have protected fixed workers too much at the cost of making it too risky for employers to hire new workers. As a consequence — it is being said — the employers are afraid of getting stuck with the new hires without being able to fire them again when their need for labor diminishes.
This assumption has become a dogma, and as all dogmas, has been sustained by faith rather than scientific evidence. With a clear apostolic mood, both the Zapatero government (socialist) and Rajoy government (conservative) have been making it easier and easier for employers to fire workers. And they have indeed fired thousands and thousands of workers. But the employers have not hired workers at the rate they have fired them. The results are clear to see for everyone who wants to see reality for what it is, rather than for what they claim it to be.
Unemployment, rather than declining, has kept increasing more rapidly, incidentally, than before the reforms. For example, from the last quarter of 2011 to the fourth quarter in 2013, 1,049,300 jobs were destroyed, with an increase of unemployment of 622,700 people. The number of unemployed persons is now 6 million people, 47% of whom do not receive any unemployment insurance (due, in part, to the cuts in this type of insurance that accompanied the last labor market reform).