Spanish government partners agree to 'repeal' conservatives' 2012 labor market regulation

The two Spanish government partners have agreed to "repeal" the labor market regulation approved by the People's Party in 2012 when the conservatives enjoyed an absolute majority in Congress.

The Socialists and Unidas Podemos had already pledged to revoke the decree put forward by Mariano Rajoy's cabinet nine years ago when they first formed a coalition government, but they recently clashed over the extent of the legislative changes.

Yet, after some turbulent days, on Tuesday the parties confirmed they would repeal the entirety of the decree and said they intend to seek a "fair and balanced deal" with unions and business associations.

Spain's labor minister, Unidas Podemos' Yolanda Díaz, aimed to fully repeal the regulation, but the Socialists' finance minister, Nadia Calviño, is thought to have defended a more moderate stance. Although some discrepancies were made public, the two senior cabinet members and President Pedro Sánchez were able to seal a deal thanks to what government sources described as "a positive atmosphere and a constructive attitude."

The cabinet wants to approve "a modern labor legislation that reviews the imbalances of the 2012 reform and leaves behind Spain's structural labor market problems."

Javier Pacheco, the head of the CCOO, said the trade union he presides over has been working on the labor market regulation reform "for a while now."

"If we are able to [put an end to precariousness] then we'll have an agreement; otherwise, there will be protests," he added. 

Unemployment and minimum wage

At the end of the third quarter of 2021, Spain's unemployment rate stood at 14.5%, while Catalonia's was 10.9%.

"The government's aim is to build a new model of labor relations for the 21^st century that modernizes the economy with the help of EU funds," said the same sources, without specifying anything beyond the fact that the new scheme will be part of the recovery plan sent to Brussels in order to receive said funds.

The Socialist-led cabinet recently raised the minimum wage from €950 to €965 gross per month in 14 installments – yet, the wages in Spain are still significantly lower than the EU average: in 2020, the average hourly salary was €16.8 in Spain, while the EU's was €21.5 and the Euro area's €24.2.