Article published by José Alberto León Alonso in El Día on 05/03/15.
We must thank Ciudadanos for their work in promoting the economic debate. Paralyze the AVE; introduce the Guaranteed Annual Salary Supplement (CSAG), the Insurance against dismissal and the second chance law; regulate prostitution and marijuana; a tax reform; and implementing the single contract are some of the proposals that this party has made in the last 45 days, with an obvious impact.
The single contract is called a “theoretical idea” by many politicians, but they will not have read Keynes when he said that “behind any action of a politician you can find something said by an intellectual fifteen years ago.” Indeed, the original proposal was made by two of the best economists in the world: Olivier Blanchard (now chief economist of the IMF, formerly of MIT) and Jean Tirole (last winner of the Nobel Prize in Economics). Ignorant, as you can imagine. FEDEA adapted its proposal to the Spanish case. It consists of eliminating all temporary contracts to create a single indefinite contract with increasing compensation based on seniority: from 12 to 20 days for dismissals that are justified or for objective reasons (growing at a rate of two days per year of seniority), and from 12 to 33 days for unfair dismissals (growing at a rate of three days per year). In practice, the severance payment would begin being the same as in current temporary contracts but, instead of abruptly “jumping” from the 12 days of compensation for a temporary contract to 20-33 days for an indefinite contract, the transition would be smoother and increasing year by year. Workers would have a permanent contract from the beginning of the employment relationship, and employers would not face the enormous gap between the low level of compensation of temporary contracts and the high level of protection of permanent contracts.
All new hires would be made with this indefinite contract, but this change would not affect existing contracts, which would maintain the conditions from the moment they became indefinite. As all contracts would be indefinite, legal protection would be extended to those who now have temporary contracts. And with compensation increasing over time, the average protection would be the same as with the current system, so that all workers are not made more precarious, but the duality between temporary and permanent workers would be eliminated.
The PP committed to reducing the type of existing contracts from 42 to 4 and ended up creating some more, and now the PSOE proposes three employment modalities: temporary, indefinite and training and relief. Its main objective would be to “end false temporary part-time contracts that, in reality, should be permanent”, penalizing false partial employment with the establishment of infractions in the form of an increase in social contributions. Temporary employment would not disappear, but the PSOE rejects a single type of contract because they understand that there are activities that would collapse, such as the hospitality industry.
Would the hospitality industry collapse with a single contract? Nobody has yet explained to me why. With the single contract, a hotelier would hire a worker for, say, three months to cover the summer, and at the end of the vacation period he would dismiss the worker, paying him a compensation of twelve days per year worked, which is exactly the same compensation to be paid for the three-month temporary contract that the PSOE would maintain. The only difference is that, if after the summer, the employer wanted to keep the worker on staff, there would be no need to make a new contract (with its administrative costs) and the worker would continue to accumulate seniority. Where is the problem?
This contract does not harm truly temporary activities, but only falsely temporary ones. In reality, the losers are the intermediaries in the labor market: ETTs, agencies, firms specialized in labor law and unions who, with the contractual simplification and the disappearance of temporary workers, would lose a good part of their income. In fact, for unions, the ideal contract model is one that ensures great conflict and a good number of lawsuits before the courts. Not in vain, they pocket 100 to 400 euros per worker immersed in an Employment Regulation File, as well as a percentage that varies between 5% and 15% for compensation obtained for more than twenty days per year worked. Layoff is a business for some. Thus, in 2009, the year with the highest number of dismissals, the unions earned about 200 million euros for these concepts. It is not surprising that they oppose a system that clarifies, simplifies and reduces intermediaries in labor relations. And the PSOE proposes giving them back the power they had in collective bargaining before the crisis. Country!
It is not an unconstitutional contract, nor does it hinder seasonal activities, nor does it attack the “acquired rights of workers.” It is not unconstitutional because there is a difference in compensation depending on the origin or causality of the dismissal. With the same seniority, a worker covered by this contract will receive greater compensation if the dismissal is unfair than if it is not. It does not harm genuinely temporary activities, since the initial compensation is as reduced as the current one in temporary contracts. Nor does it affect current permanent workers, who maintain their protection, but only new contracts. Eliminate temporary contracts so that new jobs created are indefinite and not temporary. Parents retain their protection and children have the possibility of becoming like their parents as they accumulate seniority, which does not happen now, since 40% of those over forty years of age remain temporary.
An indefinite contract with increasing compensation is not the magic solution for all problems, but it does promote more lasting labor relations in the medium term. And it's not an occurrence.
