According annual reports published by the Cato Institute and Fraser Institute´s, Spain is once again losing economic freedom, the very concept that set the basis for its progress and recovery. Even though Spain is listed 39th in the joint report, the low regulatory quality of our labor market brings us to 106th out of 141 countries that were studied.
This is illogical considering our level of development, that those in the EU are suffering alongside us and the speed with which we are getting out of the crisis. And the low grade for labor conditions is worrisome especially if we keep in mind that Spain borders on 5 million unemployed workers, a difficult number to fight against with a strict legislature, high employee termination costs and minimal incentives to encourage companies to hire.
Therefore, the CEOE, a major business lobby in Spain, will propose a unique contract with a 20-day indemnification period and a maximum of 12 months. This is one of the initiatives that lifted up the unions in previous months of negotiation, but today they would at least be ready to deal with the CEOE, given the huge employment bloodletting.
With labor reform and collective bargaining, it is now cheaper to fire people, and a major reform has been complicated.
The CEOE is ready to reopen the debate about a figure that loosens the companies? restrictions just when they are ready to employ workers, which could galvanize some activity. Zapatero´s minimum reforms for Spanish labor market forgot that more economic freedom means more growth. But employment organizations have reminded the government and the unions.
Edited in English by Brandon Dyches and Jose L. De Haro (joseluisdeharo@eleconomista.es)
