Why Brussels tugs Sanchez in Spain on the job dossier
What is happening between the European Commission and the Spanish government. The in-depth study by Giuseppe Liturri
In Madrid the preview of the “show” is already on stage, which we could see in full version in the coming weeks in Italy, entitled: No reforms, no money from the Recovery Fund.
Yesterday all the main Spanish newspapers ( El Pais , La Vanguardia , La Razon , ABC , El Mundo ) reported on the frantic day on Monday, when the summit between the Socialist Party of Premier Pedro Sanchez and Podemos ended with a stalemate and left the government on the brink of a formal crisis. It is no coincidence that EU Commissioner Paolo Gentiloni rushed onto the scene and on Monday and Tuesday had a dense series of talks with representatives of Spanish institutions, to make known a very simple thing: the labor market reform introduced by the Party's premier. Popular Mariano Rajoy is not touched. The flexibility introduced with various legislative interventions between 2012 and 2013 is an essential condition for the development of the Spanish economy and, not a secondary aspect, for the payment of the installments of the Recovery Fund.
Sanchez is in trouble with his allies in Podemos because the agreements that led to the coalition government even provided for the cancellation of the reform that between 2012 and 2014 succeeded in lowering unemployment (especially youth unemployment, which reached the 50%) only through a drastic reduction in wages that have decreased on an annual basis up to 5% between 2012 and 2014. A social butchery that has left evident scars on the skin of young Spaniards and beyond.
Now Sanchez has moved on to the more nuanced formula of "reform with the consent of all social partners". The clash also threatens the very strength of the government. On the one hand Yolanda Diaz, a combative minister of labor, on the other Nadia Calvino, minister of the economy and with a long career behind her within the EU Commission, well supported by the governor of the Bank of Spain Pablo Hernandez de Cos.
The latter believes that the flexibility guaranteed by the labor market reform is still necessary at this particular moment, because the transformations taking place as a result of the crisis must be accompanied by tools that make it possible to grasp the different company specificities. Hence the prevalence of individual agreements over sectoral ones, the flagship of that reform. De Cos also stirred the bugbear of the downward revision of GDP growth estimates for 2021 and 2022, now slightly below 6% for both years.
In short, we are the usual. As if nothing had happened since 2011 and there was no lesson to be learned. The (bankruptcy and socially expensive) requirements of economic policy are always the same: competitiveness obtained by reducing the cost of labor, under the motto “any job (at any price) is better than no job”. Patience if domestic demand suffers and young Spaniards are looking for work abroad.
Now it is up to Sanchez to heal the fracture or bend his head to the usual Brussels diktats. In the meantime, the warm-up round can begin in Rome, because the requests and the method used by the Commission will be the same. Without discounts.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/europa-spagna-sanchez-lavoro/ on Wed, 27 Oct 2021 05:36:24 +0000.