s hard-hit Spain struggles with the effects of COVID-19, the coalition government continues to launch a variety of measures to protect workers (both typical and atypical), firms, and the most vulnerable in society. In a previous post, I discussed a first wave of measures in this country. Since then, Spain is increasingly looking like an innovator. SUPRANATIONAL: In the last couple of days, this country and Italy have also been active at the supranational level in pushing for an European solidarity package (here we can refer to Milton Friedman’s notion of “helicopter money” in which Central Banks print money and states spend it), or at least some type of concerted EU instrument including the so-called “Corona-bonds.” For an overview of Central Banks’ measures to support their economies, refer to this article. RECENT MEASURES: SPAIN (for a full list):
THE RESURRECTION OF SOCIAL CONCERTATION? As discussed in the Danish post, most European countries actively involve the social partners (i.e., labor unions and employers’ organizations) in policy-making and decision-making processes, particularly in the fields of employment and labor market policy. Pedro Sánchez has called upon social partners, the presidents of the Comunidades Autonómas (i.e., Spanish regions/sub-national levels), and the political parties to join him on the bargaining table. The President of the government noted that he wants to resurrect the “Moncloa Pacts”—a series of political and economic agreements signed in 1977 when Spain was making a transition to democracy and was facing acute economic crisis. When referring to Spanish employment policy and welfare states, these pacts were extremely significant as they: 1) marked the inclusion of labor unions in decision-making processes (in a newly created democracy), and 2) established the pillars of the Spanish welfare state (including key elements of labor law and workers’ rights). Still, the opposition does not support this solution. In my next entry, I will discuss another somewhat “innovative” solution—the use of Kurzarbeit in Germany.
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After being hit especially hard by the Great Recession of the late 2000s, Spain once again is facing a difficult scenario. This country is currently ruled by a coalition government composed by the Socialist Party (PSOE) and a junior partner Unidas Podemos (a New Left party). As in other European countries (refer to the Danish post), the Spanish social partners (i.e., labor unions and employers’ organizations) play a key role in shaping and implementing a variety of measures to tackle the Coronavirus crisis. Finally, in contrast to the US, the plan was approved by the Cabinet (the Prime Minister and ten Ministers from both parties). On March 17, Prime Minister Pedro Sánchez announced the biggest stimulus package in Spain’s recent history-- €200,000 million in aid which represents about 20% of its GDP. The package allocates €600 million to the Comunidades Autonómas (Spain’s sub-national levels) and local levels to provide support to vulnerable populations and the elderly. In addition, these governments will assist in the payment of utilities (initially water, electricity, and telecommunications, but recently gas was added to the list). While Spain is not technically a federation, the Comunidades Autonómas have gradually gained competencies over a wide variety of policy areas since the end of the end of the 1970s (when it became a democracy). A key legacy of the Great Recession is the use of ERTEs (Expediente de Regulación Temporal de Empleo or Temporary Workforce Adjustment Plan) by companies to tackle the Corona-crisis. “An ERTE, governed by Article 47 of the Spanish Labour Statute, is a mechanism whereby a company can seek legal approval to temporarily dismiss a number of employees or reduce their working hours to ensure the financial viability of the business during a time of crisis.” The government seeks to make this process easier for companies who wish to temporally dismiss employees, or reduce their working hours. Under the government’s package, employees who work in companies that join an ERTE will have access to unemployment insurance, even if they did not meet the minimum time requirement. Moreover, firms with less than 50 employees will not be responsible to pay these benefits; rather, the State takes up this responsibility. Overall, this measure seeks to provide flexibility to companies while maintaining security for workers, as the Spanish labor market has been historically characterized by high levels of rigidity. Companies such as Seat, Burger King, Mercedes-Benz, Nissan, and Ryair are among the firms that have already taken advantage of ERTEs. The package also includes a one month moratorium on mortgage payments for those affected by the outbreak. On March 30th the pool of people unable to work increased as Sánchez announced that all non-essential workers will be in lockdown until April 9th. During this period, all affected workers will still receive their salaries. Spain has joined Italy and France in asking the EU for coordinated action in launching an European Marshall Plan to relaunch their economies. This plan is strongly opposed by the Netherlands, Germany, Austria, and Finland. |
Author
Mariely Lopez-Santana is a Political Scientist and an Associate Prof. at the Schar School of Policy and Government at George Mason University. In the last two decades she has spent much time studying, teaching, and writing about employment policy. She is working on a book project on state intervention and municipal distress. Categories
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