September 27, 2020

«Boosts employment and equality»

The agency says it has not found a “significant impact” of the reform of the PP on the percentage of the population at risk of poverty

The reviled labor reform against which the garments of both the social communist coalition and the unions are torn, although among all of them there is no quorum on what aspects should be suppressed, not only has it managed to recover more than 80% of the employment destroyed during the crisis but also was crucial to rescue Spain. That is the conclusion drawn by the International Monetary Fund (IMF) after a thorough analysis of the recipes developed in Spain to recover from the “dramatic” collapse of the labor market. The «Evidence» found by the IMF indicate that the changes introduced by the PP in 2012 have been fundamental for «Improve employment and income equality without a substantial impact on the overall poverty rate». The document, made by IMF experts Ara Stepanyan and Jorge Salas, also highlights the «Rapid impact» that had the labor reform in the recovery of a crisis that put at risk the distribution of income and social inclusion. «The 2012 reforms boosted employment, including that of young people. Employment growth was systematically higher and youth unemployment was lower than the expected evolution of both indicators in the absence of these reforms », underline in their conclusions the academics responsible for the analysis. Although the study ensures that in the years after the 2012 reform the Gini coefficient, which measures inequality, was reduced by two percentage points, the IMF notes that it has not found a “significant impact” of the reform of the PP in the percentage of the population at risk of poverty.

But the multilateral agency document does not avoid touching other collateral aspects of the reform. The authors acknowledge that changes in the labor market caused a decrease in average hours workedas well as a increase in involuntary part-time employment (Those workers who have part-time contracts but would like to be full-time). “The greater flexibility of part-time contracts, which was supported by the reforms, may have encouraged employers to offer more part-time jobs despite employees’ desire to work longer hours. In addition, the structural change of the economy from construction to services may also have contributed to less hours being worked, ”the report reflects. Due to this transition towards temporality, the Fund affirms that the 2012 labor reform caused a wage loss among workers and an increase in the “poverty rate” among part-time employees.

With regard to young people, the report highlights that the labor changes introduced by the PP were beneficial for the unemployment rate among those under 25 years of age compared to the situation that would have occurred in the absence of the reforms introduced. Another variable analyzed by the IMF economists is the ratio of income between 20% of the population with the highest income and 20% of the population with the lowest income. According to the results, the 2012 reform did not cause “any significant impact” on this indicator. In other words, labor reform not only did not generate more inequality but, in general terms, its effect was precisely the opposite.

More obstacles to companies

The conclusions contradict the versions that both the PSOE and its partner in the Government, United We Can, and class unions handle. The Government of Sánchez has already targeted labor reform in the previous legislature, but the lack of support and the positive evolution of the labor market halted any initiative. However, for the current social-communist coalition it is “vital” to repeal what they call «More harmful aspects» of the reform. The first step in this direction will take place next Tuesday, when the Executive repeals the dismissal for the accumulation of justified medical leave, according to the Minister of Labor, Yolanda Díaz, on Wednesday. The employer considers a mistake touch aspects like the prevalence of company agreements on the sectors as well as the limitation of the labor negotiation in the business field and the flexibility of the same, announcements that the Executive has been making. The CEOE predicts a loss in employment and competitiveness of Spanish companies.


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