Spanish Government Simplifies Dismissal Procedure
The Spanish labor market has suffered from the crisis perhaps more than any other in Europe. The country currently has about 4.6 million unemployed, which is 20% of the working-age population. This cannot but put pressure on the economy. Therefore, the reform of labor relations became one of the main recommendations that the European Union gave to Spain. A recommendation more akin to a demand.
The main question of the labor reform is: who gets paid how much upon dismissal? According to local economists, among those whom employers were forced to part with last year, 80% received compensation based on 45 days for each year worked at the company. In other words, if an employee gave five years of life to the firm, it pays him salary for 7.5 months in advance when firing him.
European experts note: the cost of dismissal in Spain is one of the highest in the world. True, on the other hand, those who work under temporary contracts (mostly in construction and services) can count on compensation based on only 8 days per year worked.
The reform prepared by the government primarily envisages a sharp reduction in the number of temporary contracts. They can only be extended for two years, and the compensation calculation increases from 8 to 12 days. It also provides that the majority of workers upon dismissal will receive severance pay based on 33 days per year instead of 45.
And finally, the most important innovation causing a storm of protests from trade unions is the introduction of the concept of so-called objective dismissal. In this case, the company will pay the employee based on only 20 days for each year worked, and he will receive notice of dismissal not a month in advance, as now, but 15 days.
True, it will be very difficult for the employer to prove 'objectivity.' To do so, he must submit documentation to the court confirming that due to technical, technological, organizational, or production reasons, he simply could not avoid parting with the employee. However, even this was not enough for the opposition. And at the end of last week, Spanish Minister of Labor Celestino Corbacho added another reason to this list, this time a purely economic one: dismissal can be recognized as objective if the company has incurred losses over the past six months.
In Spain, a wage guarantee fund (Fogasa) will be created, from which employers' costs incurred upon dismissing employees will be partially covered. The compensation of 8 days for each year worked at the company will be paid by this fund. It is to be formed through contributions of 0.2% of salary. It is not entirely clear who should make these contributions. Trade unions believe it is the employers' responsibility, while entrepreneurs think that workers should take care of themselves. After all, it is assumed that if the money accumulated in the fund for a specific worker is not used, he can dispose of it upon retirement.
The reform is to begin on January 1, 2011, and by that time, naturally, there will be no money in the fund yet. Therefore, during the first year of the new rules, the state is ready to finance it.
It is also ready to stimulate employment under permanent contracts for those who are unemployed. If a company hires a Spaniard under 30 who has been unemployed for more than a year, the state will pay 800 euros on his behalf into the social insurance fund instead of the employer for three years (for a Spanish woman – 1,000 euros). For similar citizens over 45, payments will be 1,200 euros for a man and 1,400 euros for a woman.
Nevertheless, the largest trade union associations flatly refused to support the reform. In their opinion, it infringes on workers' rights. On Monday, it was announced that in protest against the innovations in the labor market, a general strike will take place in Spain on September 29. Initially, it was planned for June 30, but the strike had to be postponed.
The fact is that a strike by public sector employees on June 8 was supposed to be a dress rehearsal for it, but according to various estimates, only 16 to 25% of civil servants supported it. The authorities then warned: they respect workers' rights, but the strike day will be deducted from both salary and vacation pay calculation. And in a crisis, when every fifth Spaniard is out of work, that had an effect.
Mikhail KRYUCHKOV.
Novye Izvestia