Spain puts into practice "free and open dismissal"

Written by The Week, 18/02/2012

Spanish companies already can fire workers without governmental permission, paying 20 days for each year of work as the an annual maximum. “Free and open dismissal”, the unions accuse, ready to resist and with a general strike on the horizon.

The rightwing government of Mariano Rajoy puts into practice measures of “liberalization of the working market” similar to those being established by the second troika's memorandum to Greece. These measures, according to the Spanish press, were defined during the close contacts between Rajoy and mrs Merkel. German chancellor considers the Spanish “labour reform” is “modeling and brave”, an example of changes that is needed to put into practice in Europe to step out of the crisis.

For the companies to fire it only needs, according to the governmental decree, that “one infers a negative economic situation in cases such as the existence of actual or expected losses or persistent decrease in revenues and sales levels”. Persistent decrease, according to the decree, is the verification of a such a situation for “three consecutive quarters”.

Evaluating the current situation, there are 43 companies listed on stock market, that theoretically are in more unfavorable conditions, that can “welcome” the new legislation. The numbers refers to consolidated groups and not to Spanish subsidiaries, in a much worse situation. According to calculation released in the media, these companies have a working force of 283415 people and represent 37 percent of Madrid's stock market general index.

Generally in the country, is much higher the number of workers already in risk with the new decree.

In this cases the redundancies can be done without governmental permission, without arbitration nor appeals, and upon a payment of 20 days of work as an annuity maximum (equivalent to 12 years of work). The revoked law predicted 45 days of compensation for a maximum of 3,5 annuities (42 years of work), a 87 percent of reduction. The redundancies were subject to arbitration and appeals.

Among the companies that, according to figures from past September, may invoke the new law are Tavex, Vocento, Adolfo Dominguez, Cementos Portland, Albertis, FCC, Ferrovial and Sacyr Vallermoso.

There are situations where consolidated groups recorded gains but within which the Spanish subsidiaries present losses for three consecutive quarters. It is the case of Telefónica, telecommunications giant, that in 2011 already fired 6500 workers even in the previous conditions. With the new law one expects the amount of new redundancy wave to be much higher.

Spain is the country with the higher unemployment rate within the European Union (22 percent) and, at this moment, only Greece comes closer after more than three years of applying austerity measures (21,5 percent). Youth unemployment is Spain is of 44 percent.