Spain’s general strike last week has sent a clear message to other Eurozone countries about how challenging it may be to implement labour market reform.
The strike was mostly peaceful, with the exception of some violent incidents in Barcelona. While participation rates are disputed, it is clear many voters are deeply unhappy with deep labour reforms announced by the conservative government of Mariano Rajoy.
The majority government, which came to power last November, wants to make it easier to hire and fire workers, claiming such reform is essential to to get Spain’s economy back on track and bring down the country’s 24% unemployment rate.
The government made its intentions around austerity measures clear from the moment of its inauguration, with a first round of cuts and the announcement of tax increases in their first cabinet meeting in December.
These measures have since been developed further and accompanied by reform of the labour market - something critics say they failed to disclose before the general election.
The plan is supported by many economists, who blame the high level of unemployment on the high cost of firing workers in Spain, making employers reluctant to hire staff and encouraging the use of temporary contracts. But major unions see this as a massive and unjustified loss of hard-won labour rights.
Their position seems to have widespread support amongst the general public, who find it hard to accept the measures in the absence of reform to the financial and banking sectors, widely blamed for the current crisis.
What Spain’s five million unemployed think of the reforms is harder to tell, but the government will continue to use their predicament to push ahead with their agenda.
The protests follow the decisive victory of the Popular Party (Partido Popular) in the general election last November. The Popular Party attracted close to 11 million votes (45%), with the Socialist Party (PSOE) coming a distant second with 7 million (29%), and the United Left (Izquierda Unida) getting 1.7 million votes (7%).
This gave the Popular Party a sizable and absolute majority of 186 seats in a parliament of 350. The conservative government claims – with good reason – to have a strong mandate from the Spanish people to implement the measures they deem appropriate to get Spain out of the crisis.
However, this claim should be qualified by the fact that the party failed to reveal the severity of their measures before the elections, and also by the fact that their victory came largely from the collapse in votes of the Socialist Party (down 15%, from 11.2 to 7 million) rather than from its own electoral gains (up 5%, from 10.2 to 10.9 million).
Moreover, since the election, and after its policies were made public, the Popular Party has suffered two important electoral setbacks in the regions of Asturias and Andalucia.
Following their electoral success in previous regional and general elections, the Popular Party was widely expected to win government in these two regions, but has failed to do so.
The electorate – including some of those who voted for the Popular Party in the general elections – seems to be sending a message to Rajoy that his government is going too far, in particular with the reform of the labour market.
These policies, while largely unpopular in Spain, are precisely the kind of reforms demanded by the European Central Bank and Eurozone countries. They insist that Spain must cut its deficit and create market flexibility, and must do so quickly for its own good and that of the Eurozone.
Yet, there is an emerging concern (if not an emerging consensus) that with the economy shrinking, and the level of unemployment at record levels and still rising, spending cuts could lock Spain (and other countries of the Eurozone in similar predicaments) into a downward spiral.
But the advocates of the austerity measures insist that “there is no alternative” (TINA), and many people in Spain – if we take the general elections as a valid indicator – agree with that position, just as they did in Great Britain when Margaret Thatcher popularised TINA.
Everything suggests that tough reforms will go ahead and will be confronted with strong resistance, mainly by the unions. The big question now is whether the reforms will bring down, and quickly, the level of unemployment. If they do, the unions will find it very hard to attract popular support beyond their members.
In any case, we are entering a period of increased tension in Spain that will test the resilience of the Conservative government and the patience of the Spanish people.
The general strike is only part of the opening act in a period in Spanish politics that will have major repercussions for the future of the Eurozone.