Monday, February 20, 2012

Tension mounts in Spain

I think we can safely say that the mass rallies that took place on Sunday in cities like Madrid and Valencia were just the tip of the iceberg to come. I would not be surprised to learn of a call for a general strike in the country sometime soon.

The protests at the weekend were about the government’s plans to make it easier for employers to fire workers and to introduce wage cuts. The labour reforms are meant to create jobs and and reduce the 23% unemployment rate in the log term. However, the economy is set to shrink by 1.7% this year and even the government expects the unemployment rate to increase in the short term.

From the workers perspective the moves will only serve to worsen their situation, we all understand that. However, the fact is that employment in Spain was stagnant. It was very hard for companies to fire people and when they did, the redundancy payments they had to fork out were crippling. That might have suited those who were employed but meant that companies struggled to keep their completive edge in the European market. They were also unable to create new jobs for the young people fresh into the job market.

By comparison with countries like Germany, Spanish workers were overpaid. During the boom years when the economy was buoyant, Spanish workers enjoyed pay rises which far exceeded their European counterparts. In present society, we have all come to expect more; to be now told you are going to have less is therefore a bitter pill to swallow. There aren’t a lot of choices open to Spain if it wants to regain its former economic stability, maintaining the status quo is no longer an option.

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