Spanish unions up in arms at Rehn’s “outrageous” proposal of wage cuts for jobs

Spain’s labor unions and the main opposition Socialists on Wednesday wasted no time in rejecting European Union Commissioner for Economic and Monetary Affairs Olli Rehn’s backing for proposals that workers accept wage cuts in exchange for a commitment by companies to invest more to create jobs.

In a blog posted Tuesday, Rehn seconded a recommendation made by the International Monetary Fund last week that labor unions agree to a wage cut of 10 percent over two years as part of a grand pact with business to reduce unemployment in Spain.

Despite a fall in the second quarter, the number of people out of work in Spain remains at just under six million, with the jobless rate at 26.2 percent, more than double the rate across the European Union. Unemployment among workers under 25 is over 50 percent.

The director of communication of the CCOO, Fernando Lezcano, in comments made to newswire Efe expressed the leading labor union’s “absolute” rejection of Rehn’s suggestion. He said that since the crisis began in Spain, the response had already been one of international devaluation through job insecurity and lower wages.

“This not only has proved ineffective in pulling the country out of the crisis, but has extended it instead,” Lezcano said. He pointed out that people in Spain are already working for “subsistence” salaries.

Isn't it worth a serious try, for the sake of those millions of young Spaniards who are unemployed?”

He said CCOO is in favor of policies that stimulate activity, accompanied by salaries and pensions that encourage consumption.

UGT official Toni Ferrer described the idea of wage cuts for the promise of jobs as “outrageous” as pushing wages further down would lead the country to “misery.” He said the “neoliberal” policies imposed on Spain had failed as witnessed by the labor reform introduced by the conservative Popular Party government of Prime Minister Mariano Rajoy in February of last year, which rather than creating jobs had resulted in an increase of 600,000 in the number of people out of work.

Ferrer pointed out that since 2010, real wages after inflation have fallen by 6.3 percentage points with “no impact on unemployment,” but with negative consequences for consumer spending and investment.

The UGT said companies had failed to uphold their part of an agreement with the unions to rein in their margins in exchange for wage moderation, pointing to the fact that corporate earnings had risen 2.2 percent last year, while salaries fell 5.4 percent.

For his part, Socialist leader Alfredo Pérez Rubalcaba advised Rehn to “forget about his recipes,” which have been “venomous” for Spain.

In his blog, Rehn acknowledged the difficulties in forging a pact for lower wages.

“I don’t underestimate the political challenge to bring about a broad political and social consensus on an economically optimal path of adjustment,” Rehn said. “But wouldn’t it still be worth a serious try, for the sake of those millions of young Spaniards who are currently unemployed?”

EC spokeswoman Chantal Hughes said that while the views Rehn expressed in his blog were personal they were also in line with those of the Commission.