Op-ed: Fired workers strike again

Heavy industry, commerce, distribution, telecoms, automobile, construction. All industries are facing payroll cuts. Telefónica's Spain Redundancy Procedure (acronym is ERE in Spanish) is a clear result of how major companies have tried to keep workers on the payroll, as Zapatero had asked them to do, but ultimately resorted to layoffs. A second round of layoffs could precede another bout of recession.

For the nearly five million unemployed, the ERE is another lashing that would diminish consumption, investment and related businesses. We will feel this pain again because the wounds from the last recession were not healed, but patched up quickly and superficially. They were directed at the symptom, not the cause: a labor market that cannot adapt itself to a crisis by adjusting salaries, hours or shifts, but must do so through layoffs. The government has only attempted ineffectual touch-ups accompanied by a lot of noise from the media despite their lack of content. Neither the labor mini-reform nor collective bargaining has galvanized companies to hire. Costs of employment remain very high and, along with taxes, are significant drains on corporate liquidity. This is not ideal at a time when the credit markets are dry.

Zapatero has disappointed workers. Recently in Moncloa, workers asked him to create jobs in Spain. Clearly he is not determined to do this. How so? The government has not fulfilled the counter payment or structural reforms that it intended, and in their place has sewn mere patches onto a failing strategy.