Dear Sir,

I may, I would like to reflect on the editor's comments about Spain's unemployment problem, and if the public and the trade unions are right in blaming the government for not attempting to do anything to solve it.

Firstly the trade unions. They are the last ones who should be complaining, as over the past three years, some would say three decades, have repeatedly vetoed any discussions about reforming the current labour laws, that anyone with a minimum amount of common sense knows that without being drastically changed, updated for the current global economy, unemployment will not go down, ever.

Secondly, governments cannot wave a magic wand to create employment. Make jobs at the taxpayers expense, maybe, but create them, no. The private sector is the only sector that creates jobs, and with another recession looming, I doubt very much that it will be willing, or able, to do so. Even if the economy did seem to be improving, it takes a brave, or possibly foolish, business person to hire people under the current employment laws.

Just so that your readers who are fortunate enough not to run a business in Spain know what these entail, may I use your valuable space to, as I understand them, spell them out.

Lets say you hire someone for a 1.000 a month. Many people do not know that on top of this, the employee gets a minimum two months extra payment, or bonus, per year.

Some sectors get three, our Palma municipal bus drivers get four. This brings the wage to around 1.170 a month. The social, health and safety and gestor costs of around 38% are based on this figure, so the employee now costs the employer around 1.600 a month. Now comes the interesting bit, i.e. the length of the contract.

If it is six months or less, the employee can be let go by just paying the pro rata months holiday i.e. 15 days plus any of the local or national fiestas he /she worked through, lets say five, which adds another twenty days, which based on the initial salary plus bonus figure is around 780. Total cost per month, roughly 1.750, a 75% increase on the initial salary.

Things start getting complicated when the contract is, what is called here “indefinite”, i.e. “for ever”. If a business needs to let someone go for work related issues, then the fun really starts.

The law states that if the reason is valid or documented, no compensation needs to be paid, but as the unions do not believe that there are any valid reasons, the case will go to court, the backlog at the moment being around 10 months.

If the judge, who for safety's sake, is generally biased against the employer and rules against him, the employer has to pay all salaries, bonuses, holiday pay and social costs accrued during this time.

Any reader still reading this will have come to the conclusion that most employers, to get a quick settlement, will agree to pay the compensation, based on 45 working days per year, which with a bit of negotiation can sometimes be reduced to 33 days per year based on the aforementioned 1.170 figure.

Which means, at the end of the day, most employers, just be on the safe side, will add these 33 days to the annual salary figure, which brings us to a grand total of around 2000 cost per month, double the initial monthly salary.

The good news is that if things go pear shaped and the business person can documentally prove, under no shadow of doubt, that the business has been losing money for a minimum of two years, the compensation to be paid is ONLY 20 days per year.

Lastly, the employer should be made aware that he is liable for the employees safety, not only in the workplace, but during his journey, by the shortest route, to and from his normal place of abode.

Still want to help solve the unemployment problem?

Your sincerely, Simon Tow


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