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THE EURO ZONE

A bad idea

Is protecting or augmenting workers' rights compatible with returning Spain's economy to health in the wake of the Covid-19 (C19) crisis? That's the key question posed by the Spanish government's most recent pledge - namely, to enact the "complete derogation" of labour market reforms made by Mariano Rajoy's Conservative administration in 2012. Generally speaking, these handed more freedom and power to companies, but at the cost of workers' rights and stability. As soon as they took power, the Socialists and their junior partner, leftist Unidas Podemos (UP), vowed to reset the balance in favour of employees, albeit gradually and in consultation with companies.

Naturally, Spain's business world is furious at the latest announcement, and not just because it wasn't consulted (it wasn't consulted before an amendment to sick-leave legislation in February, either). The Confederation of Employers and Industries of Spain, the largest such federation in the country, has said that Pedro Sánchez's promise to completely undo Rajoy's reforms will have "incalculable negative consequences" for an economy already rendered acutely vulnerable by the C19 pandemic.

What's most salient about this pledge, however, is not its actual content - it's the way in which it was made. It appeared as part of a document signed by the both parties in the government and the radical Basque group EH Bildu last week, a pact which also guaranteed, in exchange for the labour reforms, the latter's abstentions in another vote for an extension to the state of alarm (although, oddly, it wouldn't have made any difference if EH Bildu hadn't abstained: their votes weren't decisive).

Sánchez, then, made a promise to go much further in repealing Rajoy's controversial legislation than he previously said he would, and did so in a covert deal with a fringe group in order to extend Spain's state of alarm (and therefore, of course, to preserve the enhanced powers given to his government in that state). To make matters worse, the pact between the Socialists, UP and EH Bildu - a group which has been criticised for not publicly condemning the now-disbanded Basque terrorist group ETA - was only revealed to other parties after last week's congressional debate.

It's hard to overstate just how bad an idea this deal was for the Socialists and UP. First, it does nothing to refute the opposition's claim that their government operates in an opaque and underhand manner, especially in its handling of the C19 crisis. Secondly, in collaborating with a radical group such as EH Bildu, Sánchez risks alienating the more moderate Basque National Party (PNV), on which he has often relied for support in congress (indeed, the PNV voted for the extension last week). And last but certainly not least, this stealthily-made pact highlights, once again, the government's readiness to promise anything to anyone so long as they receive much-needed votes in return.