A triumph of failed ideas European models of capitalism in ... - Journal

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Spain: the nightmare of Mediterranean neoliberalism.................................................................................................................................................................The current reform package deals mainly with three areas (Cruz 2010;García et al. 2010): individual contracts, labour market brokerage andcollective bargaining. In terms of job contracts, the new reform introducesnew measures to facilitate job dismissals and layoffs and to make themcheaper, for both groups and individuals, on the assumption that the highcost of this hinders job creation. Among the various provisions in thismeasure, there is the government subsidy to employers for legal lay-offsthat if applied would cover the costs of all kinds of dismissals (apart fromunfair dismissal) for up to 12 days per year worked. In terms of brokerage,the most important innovation is that it enables temporary employmentagencies to operate in virtually all industries (previously, this was bannedin some areas, such as construction) and allows brokerage in the labourmarket to be outsourced to these agencies. This measure is yet to bedeveloped, but it may have a significant effect.The most radical change seems likely in collective bargaining. Thischange is aimed primarily at reducing the valid duration of agreementsonce they have expired, setting maximum time limits and the mediationof an arbitrator to impose a final solution when there is no agreement.The reform also seeks to promote bargaining at company level and lessreliance on negotiated agreements above the industry level. This ispotentially a radical change because in a country dominated by smalland micro enterprises it opens up the possibility of a labour market inwhich the only real collective bargaining may take place in a smallnumber of companies. This is a path that once again moves along thelines of encouraging low wages as a basic strategy for profitability andcompetitiveness. It is a path that Spain has been down in the past andprobably explains the way production and society is oriented, which isat the core of the problems in the Spanish economy.This recession seems to show a new twist in a policy with which Spain haslong been associated. The plausibility of this policy rests on the fact thatunemployment causes massive social demand for urgent solutions andlabour reforms are presented as the first medicine to be taken. Itsproponents tend to forget the other features that explain Spain’s highunemployment. In fact, they apply the old partial analysis thatKeynesians debated over 70 years ago. As a result, they impose measureswhich, until now, have proved effective only within the framework of aproduction model characterised by limited technological developmentand capacity for innovation, low cooperation and low labour recognition.A triumph of failed ideas – European models of capitalism in the crisis 213
Josep Banyuls and Albert Recio.................................................................................................................................................................Perhaps what is new in the current recession is that this model, which hasbeen especially effective in areas of manual employment, is beinggeneralised to the entire labour market.Overall, the changes that have taken place during the recessionreinforce the dominant features of the previous model. No changes areproposed in the structure of production and the focus is being placed onincreasing labour market flexibility by means of low wages. It issignificant that the reform of vocational training has come to nothing,while reforms are in progress to allow greater wage dispersal. Likewise, theadjustment plans based almost exclusively on cutting costs do not fosteremployment or solve Spain’s social deficits, nor do they help the traditionalfamily model to adapt to new work requirements and demographics.5. Lessons learned and prospectsThe recession in Spain is not merely a matter of cyclical ups and downs. Ithas tested the fragility of our employment model and the need for profoundtransformation. It is clear that the measures being adopted – and which theconservative government emerged from the last general election isexpected to take – will not entail a radical change compared to the previoussituation. Instead, the current situation indicates the persistence of thesame model of action and strong dependence on the past. This dependenceis due to a number of reasons: the real difficulty in transforming productionstructures and developing new activities when the existing ones collapse;the persistence and power of economic elites and their ability to imposetheir interests and block alternatives; the persistence of the analyticalapproaches used by the most influential academic and professionaleconomists; and the restrictions imposed from outside. Therefore, this is arecession that can be considered the result of neoliberal policies which inSpain gave rise to a spectacular financial-property bubble. Far from leadingto a thorough review of these policies they are being reinforced. In the heatof the moment, under pressure from mass unemployment and budgetaryproblems, the policies adopted reinforce the power of these groups, weakensocial and labour rights and put all trust for recovery in an etherealrestoration of confidence and competitiveness.In this context, European policy does not seem to be mitigating thedepth of the recession, either. Devaluation is not an option. For an214 A triumph of failed ideas – European models of capitalism in the crisis
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Table of contentsSteffen LehndorffI
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The Austrian model and the financia
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Hungary’s full-blown malaiseAndr
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List of contributors...............
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EuropeanTrade Union InstituteBd du
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