Spain to reform conservative labour deal, empowering unions in pay talks

Workers set up a huge scaffold as a Spanish flag flutters in Madrid
FILE PHOTO: Workers set up a huge scaffold as a Spanish flag flutters at the Colon square in Madrid, Spain, November 2, 2021. REUTERS/Sergio Perez

December 23, 2021

By Belén Carreño

MADRID (Reuters) -Spain’s left-wing government reached a deal with unions and employers, the Labour Ministry said on Thursday, ending months of talks and bringing it a step closer to overturning a previous conservative administration’s pro-business reforms by granting more power to unions in bargaining contracts.

The new deal also limits the extent to which companies can rely on temporary contracts, and makes permanent a furlough scheme brought in to cushion the economic blow from COVID-19.

“We end 2021 fulfilling the government’s commitment: a new labour law that recovers rights in favour of decent work,” Labour Minister Yolanda Diaz tweeted.

Reforming its labour laws was one of the commitments made by Spain to the European Commission to obtain the second tranche of European recovery funds. Spain expects to receive 70 billion euros ($79.14 billion) in total, but so far only 19 billion euros have been secured.

The previous text was drawn up in 2012 without consensus and has generated significant labour conflict. It was a condition for Spain to receive a bank bail-out and concentrated collective bargaining power with companies, with scant union representation.

Trade unions claimed the new deal as a victory for workers, saying it restores rights that had been suppressed for decades, while employers also touted the deal as allowing companies necessary flexibility.

“The agreement… ensures freedom of enterprise and legal certainty and contributes to social harmony,” the CEOE employers’ association in a statement.

The 2012 reform favoured the creation of companies that paid wages below sectoral agreements, creating tension with unions, as well as among companies that saw such practice as akin to unfair competition.

Now companies will maintain the right to flexibility around issues such as working hours, while wages will be set through sectoral agreements, where unions have bargaining power.

As Spain is the EU country with the highest use of temporary contracts, the new regulation tightens conditions for their use, limiting them to short periods of time.

Improper use of temporary contracts will be penalised with fines and social security penalties.

($1 = 0.8845 euros)

(Reporting by Belén Carreño; Editing by Aislinn Laing, Nathan Allen and Dan Grebler)