Spain: Historic labor market reform approved

After months of negotiations, the controversial conservative labor market reform of 2012 will be replaced. Prime Minister Sánchez speaks of a “triumph for all of Spain”.

Prime Minister Pedro Sánchez, Economy Minister Nadia Calvino and Labor Minister Yolanda Diaz (from left) in Parliament in Madrid on Thursday.

Juan Medina / Reuters

(dpa) The controversial conservative labor market reform of 2012 is being replaced by more worker-friendly regulations in Spain after months of negotiations. The draft reform tabled by the left-wing minority government was approved by parliament in Madrid on Thursday with a narrow majority of just one vote. Success on this sensitive issue is immensely important for Prime Minister Pedro Sánchez of the Socialist Party (PSOE) – the reform of the labor market was one of the conditions agreed with the European Commission for receiving the Corona aid. Spain is entitled to 140 billion euros from the reconstruction fund.

In the debate before the vote, Labor Minister Yolanda Díaz spoke of a “historic reform” that “clearly rejects the culture of precarious work”. This is the first labor market reform in Spain that has been coordinated with all social partners (with the largest trade unions and also with the employers’ association CEOE) since 1980. Therefore, in addition to the 154 MPs from the two coalition parties PSOE and Unidas Podemos (UP), the representatives of the liberal Ciudadanos, who belong to the opposition, also voted “yes”.

However, the success of the vote only came about thanks to the yes vote of a member of parliament from the opposition People’s Party, who assured that he had voted against it. A protest by the party was dismissed by Parliament Speaker Meritxell Batet because a technical error was ruled out. MP Alberto Casero must have voted yes, it said. It is important that the reform is through, said Sánchez. “It’s a triumph for all of Spain.”

Temporary employment contracts are not prohibited under the reform that has now been approved – as originally planned – but are made significantly more difficult. The sharp reduction in severance pay was not reversed. The reform package put together in the crisis year of 2012 gave employers much more flexibility in hiring and terminating employees. Almost ten years later, Spain still has the highest unemployment rate in the EU at 13 percent.

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