What is at stake when we talk about the “repeal of the PP’s labour reform”?

The labor reform has confronted the two parties that make up the government. The legislation that the Ministry of Labour and the social partners have been negotiating for months includes the repeal of the “most harmful aspects” of Rajoy’s regulation of 2012, as the Government of Pedro Sánchez called them, and other key structural reforms in the Spanish labor market, such as the reduction of temporality. Yolanda Díaz has assured Monday that part of the socialist wing of the Government does not want to repeal the PP reform and has asked the party for clarity in this regard. Sánchez has responded that “the whole Government” is committed to carrying out a “modernization of labor legislation”, he said, “with a vocation for consensus”.

Yolanda Díaz asks the PSOE to “clarify” its position on labor reform: “It’s not about who leads, but about what we will do”.

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Under the proclamation of “repealing the labor reform of the PP” have been, depending on the time, different measures of the legal framework of the Government of Rajoy. At the moment, in the legislation that Labour is negotiating with the social partners within the Recovery and Resilience Plan, it is specified in these three (or four) aspects:

– First, the recovery of the primacy of the sectoral agreement over the company agreement, which affects key issues such as wages. This measure aims to prevent companies from using their own agreements to make conditions in a given sector more precarious and to compete on a downward trend by devaluing wages. In addition, unions often insist that it rebalances collective bargaining. Sectoral unions are often more powerful, and have more bargaining strength vis-à-vis employers, than works council representatives in many companies, where there is sometimes more fear of confronting employers. Employers argue that it gives more “flexibility” to the labour market.

– Secondly, the recovery of the indefinite ultraactivity of collective agreements. That is, the extension of agreements once their validity expires until employers and unions agree on a new one. Rajoy limited ultraactivity to one year. It is also underlined as a necessary measure to give power back to the workers in the negotiation with the companies, as some of them do not show any interest in agreeing a new agreement as they are aware that, if they do not do so, the previous one will expire after one year.

– Thirdly, toughen the possibility of applying the substantial modification of working conditions unilaterally by the employer and try to do away with the ‘ad hoc’ commissions in these negotiations, highly criticized for their little power in front of the company. Labour proposed that this measure can be applied in a situation that justifies a collective dismissal, in order to avoid this situation.

A fourth element is always added to this package, although it is not strictly speaking a dismantling of the PP’s labour reform: the revision of subcontracting to avoid the devaluation of working conditions. The most recurrent example is the precariousness of the ‘kellys’, the hotel room cleaners who have been outsourced in many hotels and subcontractors have worsened their previous working conditions. Here, Labour proposed to the social partners that the collective bargaining agreement applicable to contractors and subcontractors should be “that of the sector of the activity carried out in the contract or subcontract”. Again, employers refuse to restrict this way of “flexibility” for companies.

As expressed by Yolanda Diaz, part of the Executive would be, despite what has been agreed, in favor of the primacy of the company agreement on the sector. On Monday, the governor of the Bank of Spain has supported this measure of the reform of the PP and, when asked about it by the media, Nadia Calviño has avoided revealing his views on the matter. She did stress the need to seek a balance between worker protection and the “flexibility” of the labor market.

The first vice president, who stood at the end of last week as coordinator of the labor reform – in a move that United We can branded as “interference” – has not joined the speech of his government on the need to repeal the 2012 legislation, which has even positively assessed in the past. Recovering the prevalence of the sectoral agreement over the company agreement is an express commitment of the coalition agreement between PSOE and Unidas Podemos.

From the “most harmful elements” to the “most urgent”.

To understand what “repeal of the labor reform” is on the table at this time, the PSOE and UNASIt is worth taking a look back. PSOE and Unidas Podemos had in their electoral programmes, and in their constant proclamations from the opposition, the “repeal of the PP’s labour reform”. Without nuances. When both parties reached La Moncloa -first the socialists alone and then in coalition with Unidas Podemos-, the formations landed this idea. The repeal would be partial.

In the monocolor Government of the PSOE, with the Minister Magdalena Valerio at the head of Labour, the concepts “most harmful elements” of Rajoy’s reform and “Statute of Workers of the XXI century” were coined. The plan was to dismantle only some issues of the PP legislation, which the Government pointed out as the most harmful, and to develop a new labour regulation to address new challenges in the labour market.

The “most harmful elements” consisted basically of: recovering the primacy of the sectoral agreement over the company agreement, the ultra-activity of collective agreements and a necessary review of subcontracting was incorporated. The then Minister Valerio advanced with the unions a legal text on these issues, very developed, but the PSOE government then did not approve them for not obtaining the support of employers.

With the coalition Executive, the Ministry of Labour ended up in the hands of United We can. Specifically, Yolanda Diaz. The coalition agreement between PSOE and Unidas Podemos included the following wording: “We will repeal the labour reform. We will recover the labour rights taken away by the labour reform of 2012”. After this general premise, the agreed text went into detail on some elements that were considered “more urgent” to overturn. These included the prevalence of the sectoral agreement over the company agreement, ultra-activity and, in addition, dismissal for medical leave.

The coalition pact also addressed – although outside of these “most urgent” points – the need to “limit” the capacity for unilateral modification of contract conditions by the company and the review of the so-called “opt-outs” of collective agreements.

A “phased” repeal

Minister Yolanda Díaz explained shortly after taking over the Labour portfolio that “technically” the entire PP labour reform could not be repealed, something that “would be irresponsible”, as she said in an interview in El País. The legal framework that approved the Government of Mariano Rajoy in 2012 was very extensive and the coalition Executive argued that it was not feasible to overturn it completely. In addition, he assured that he did not want to return to the previous regulation as it was, with which major problems persisted in the labor market, such as high unemployment and excessive temporality.

Thus, the new plan promoted by Díaz was a partial repeal or ‘dismantling’ of several elements of Mariano Rajoy’s legislation over several phases. The first was to eliminate dismissal for medical leave, which is the only measure that has been approved to date. Secondly, it was proposed to address the ‘most urgent’ elements and, in the longer term, to reform other issues of the PP reform – collective dismissal was mentioned, for example – while addressing a broad modernisation of the labour framework on issues such as the reduction of seasonality, high unemployment, a revision of the working day to improve work-life balance and other labour market challenges.

But then came the pandemic. The health crisis interrupted the government’s legislative plans, which had been focused for months on ERTEs and protection against this crisis. About five months ago, the Ministry of Labour recovered the weekly negotiation of the dismantling of the PP regulation, of the “most urgent” elements, which were included in the labour reform committed to Brussels within the Recovery Plan, along with other structural measures: the review of training contracts, contracts to reduce excessive temporality and the creation of permanent ERTE to avoid mass layoffs in times of crisis. Yolanda Díaz has insisted this Monday that she negotiated this package with President Pedro Sánchez.

Now, the parties that form the Executive have been summoned to talk to review the coalition agreement as it affects the labor reform. In the first meeting, on Monday afternoon, there has been no consensus. In the PSOE say their commitment to the dismantling of the PP reform is maintained, but in United We denounce that part of the Government wants to maintain the ‘status quo’. In these days it will be revealed if the internal differences are a matter of internal coordination and primacy of the leadership of Calviño or Díaz, or if it is a change of mind regarding the government pact.

This is today’s installment of our podcast ‘A topic a day’, which analyzes the crisis in the Government. You can follow it on Podimo y other platforms.

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