Spain shows the way forward on labour market reform

For decades, labour law reform in Spain has weakened trade union rights, ‘liberalised’ labour markets, and privatised public goods. Driven by a frenzied commitment to free markets, this process has created insecurity for Spanish workers – who suffer the highest youth unemployment rate in Europe. The resultant economic growth and wage growth has on the other hand been anaemic. 

However, since 2020, the progressive coalition government formed by PSOE and Unidas Podemos has begun taking decisive steps to improve the position of labour. Deputy Prime Minister Yolanda Díaz has been at the forefront of negotiating major new reforms which reverse the debilitating impact of Spain’s anti-union legislation.

The Reforms 

According to a recent publication by CCOO, Spain’s largest union centre, the first achievement of the reforms is to restore the applicability of Collective Bargaining Agreements (CBAs) until new agreements are made to supersede them. Recent (2012) anti-union laws legislated that, once the agreed period of a CBA expired, all provisions within it automatically became null and void. This incentivised employers to run down the clock before entering negotiations with unions, to make sure that negotiations never built on existing agreements and always started from the lowest floor possible.  

This process rapidly eroded worker terms and conditions built up over long periods. It also significantly reduced the bargaining position of labour, compelling unions to strike deals quickly under threat of losing standing agreements. Under the reformed arrangements, CBAs will no longer expire, and will continue to function until new agreements are struck to replace them, placing the time advantage back into the hands of trade unions. 

Another major achievement of the reforms is to prevent enterprise level agreements undercutting sectoral ones. In the past, enterprise level agreements have been allowed to agree reduced terms below those agreed at sectoral level, effectively allowing individual employers to render sectoral agreements redundant. Agreements negotiated across a sector will now form the floor from which individual enterprises can negotiate upwards. 

The reforms also mean that outsourced and contract workers will automatically be covered by sectoral agreements, mitigating against the exploitation inherent in casualisation and reducing the incentive to employers to outsource. They also include measures to tackle systematic abuse by employers of filling permanent roles with staff on sequential temporary contracts. Further, the inspectorate which monitors this kind of activity will be strengthened and sanctions on employers who engage in it will be toughened. 

The Reformers 

Achieving these reforms has not been an easy process. It’s been made possible by the election of a progressive government with trade union friendly ministers in key positions of authority. Spain’s major union federations, including CCOO and UGT, have thrown their full weight behind the process, and government ministers like Díaz have responded by strengthening ties between the political left and organised labour. 

The reform process was guided by the principle of social dialogue, with employers and unions involved as equal partners in the process. By taking the approach they have, Díaz and the Spanish government have shown that major structural reforms can take place in a consensual fashion without triggering a political and industrial crisis. It has also advanced the Spanish left - and Díaz in particular - into a position of mainstream credibility, as the process has been popular with the wider electorate as well as trade union members. 

The Lessons 

With progressive governments coming to power around the world, from Germany to Chile, the Spanish government and union movement has set a strong pace for others to follow. The Spanish example reminds us of the value of internationalism not just in resisting adversity, but in learning from each other and sharing the experience of success. 

The lesson for the UK is clear. Strengthening workers’ rights in partnership with trade unions is not only necessary to rescue our economy from the race to the bottom on wages and conditions, but it’s electorally popular too. In particular, Labour’s New Deal for Working People is a significant document which creates a platform for a shared agenda between unions and a future Labour government, with reinvigorated collective bargaining at its heart. Strengthening workers’ collective rights is the vital beginning of a wider remaking of the economy in the interest of those who work. “

Spain is taking the first steps towards breaking the ideological grip of austerity and market fundamentalism, proving that pro-labour reforms are both good for the economy and popular with electorates. Spain is also showing what can be achieved when strong bonds between trade unions and progressive governments are maintained and extended, and that a coherent reform process can win the consent of employers as well as workers. 

Most importantly, the Spanish government and trade union movement has proved that - with courage - deep, structural reforms in the labour interest are possible. Spain has shown how pro-labour governments can make the economy serve the working class, just as much as the working class serves it.