Spain’s Socialist-led government has achieved one of its biggest policy goals after a single vote cast in error secured parliamentary approval for labor reforms that are a condition for aid from the EU € 800bn coronavirus recovery fund.
The measures are intended to cut the proportion of the Spanish workforce on temporary contracts, currently around 25 per cent – by far the highest level in the bloc.
While the labor reform was agreed with business and union organizations in December following months of negotiations, the government was unable to build a stable parliamentary majority for Thursday’s vote.
Instead, the uneasy constellation of parties that has backed Prime Minister Pedro Sánchez over the past two years splintered, leading the government to appeal to centrist votes to pull together the thinnest of majorities.
In scenes of confusion, the measure was approved by 175 votes to 174 after the president of the chamber of deputies had initially declared it defeated. The legislation only went through because a member of the People’s Party, the center-right opposition, appeared to mistakenly back the measure and was not permitted to change his vote.
The PP accused the president of the chamber, the Socialist Meritxell Batet, of rigging the vote, blamed parliament’s IT system for the error, and said it “would make all the necessary complaints so that justice is done”.
Failure of the bill would have been devastating to the Sánchez administration.
“This is the most important structural reform of this parliament,” said Pablo Simón, professor of politics at Madrid’s Carlos III University. He added that the reform was more likely to endure because of the compact with business and unions and because it ultimately sought to tweak, rather than overturn, labor market changes enacted by a previous center-right government a decade ago.
Spain’s labor market remains the country’s biggest economic black spot. Although the number of people in work has reached an all-time high of 20m and joblessness has fallen to its lowest since before the financial crisis, the unemployment rate of 13 per cent and youth unemployment of 30 per cent are both twice the EU average.
Supporters of the 2012 measures – which reduced redundancy pay and gave company-specific negotiations precedence over sector-wide deals – say they added much needed flexibility to Spain’s dysfunctional labor market. Critics say they made inequality worse. A pledge to repeal those rules was a feature of the 2019 pact that established the minority leftwing coalition government.
Instead of scrapping the old rules outright, the new labor reform largely focuses on the drive against temporary contracts, which will be limited in many cases.
With leftwing Catalan and Basque separatist parties that normally back the Sánchez administration baulking at the measure, the centrist Ciudadanos party and several smaller groupings provided decisive support in Thursday’s vote.
Ciudadanos – which is fighting for its existence after collapses in its vote in recent elections – says the agreement with business and unions should be respected.
Simón argued that the measure’s passage would not only help secure the EU funds on which the government’s political and economic strategy rest, but also bolster an attempt by the prime minister’s Socialists to lay claim to the center ground.
Spain’s € 70bn of recovery fund grants formally depends on meeting benchmarks agreed with Brussels. Having received € 10bn at the end of last year, the country is due to request the next installment of € 14bn before April.
The labor reform was originally negotiated by Yolanda Díaz, Spain’s Communist labor minister and the likely prime ministerial candidate in the next elections for the radical left Podemos grouping. But she had resisted seeking to enlist her ideological foes in Ciudadanos to help pass the bill.