Labor Relations in the Post-Franco Period

Labor Relations in the Post-Franco Period

The Franco regime ended amidst a wave of worker ferment and considerable strike activity. By 1975, brutal repression no longer sufficed to snuff out social discontent, as worker militancy overwhelmed an increasingly dysfunctional OSE and forced employers to negotiate directly with representatives of the semilegal independent unions. The strike waves that crested between 1974 and 1976 coincided with the huge oil price increases that began in 1973. The country's political elite, because it was engrossed with the transition to parliamentary democracy, gave only passing attention to labor unrest and to the increasing deterioration of the economy. The institutional changes of this period had not yet established channels for collective bargaining, nor did consultative machinery exist to negotiate general wage guidelines.

Industrial workers, having inadequately partaken of the growing prosperity of earlier years, resented rising inflation and sought to make up for lost time despite mounting economic difficulties. A virtual wage explosion took place as workers and their semilegal spokesmen extracted large pay increases from their employers. From 1974 to 1976, wages rose much more rapidly than did the cost of living. Analysts estimated that wage increases in those years averaged 20 to 30 percent per annum. Price controls managed to keep inflation well below these levels, at least for a time. Profits declined sharply, while the wage component of Spain's national income rose steeply--by four percentage points between 1974 and 1975. Output was maintained at fairly normal levels, as increased wage levels led to rapid growth in consumption, but depressive factors soon had an adverse effect on the economy. Unemployment rose from an insignificant 2.5 percent in 1973 to 8.5 percent in 1979, and thereafter it continued to rise steadily.

Free trade unions were formally legalized on April 28, 1977, and the first post-Franco parliamentary elections, which were held the following June, saw Suarez and his center-right Union of the Democratic Center (Union de Centro Democratico--UCD) emerge victorious, but with only a plurality of the parliamentary seats. In October 1977, government and opposition parties agreed on an economic package, the Moncloa Pacts. The pact were designed to prevent further economic deterioration and to buy time while the country awaited the October referendum on the new 1978 Constitution. The pacts called for a 22-percent wage increase ceiling. This figure was below the rate of inflation, and it signified a reduction in popular purchasing power. In 1979, however, the government-labor consensus came to an end; partisan politics resumed, as unions sought wage adjustments that were at least equal to increases in the cost of living.

The Workers' Statute, adopted in March 1980, articulated trade union rights as guaranteed by the Constitution. The statute eliminated direct government intervention in labor relations. It also included provisions for minimum wage standards, for access to social security funds, and for a delineation of the contractual nature of wage accords. Democratically elected works councils (comites de empresa) were established as spokesmen for employees, and unions were given responsibility for arriving at industry-wide, and at local wage agreements.

During the 1970s, Spain's economic recession and the critical situation confronting many firms led to the establishment of implicit or explicit social contracts in which government, employers, and unions participated. Unions tended to accept wage restraint, and they increased productivity in exchange for improved job security and for promises to create more job opportunities. In 1980 the UGT and the Spanish Confederation of Employers' Organizations (Confederacion Espanola de Organizaciones Empresariales--CEOE) negotiated a pact called the Inter-Confederation Framework Agreement (Acuerdo Marco Interconfederal--AMI), embodying these features. The agreement set the pattern for 800,000 companies. These companies had an aggregate work force of 6 million persons, or half of the country's economically active population.

Since the death of Franco, the UGT and the CCOO have been engaged in a fierce rivalry for hegemony in the labor movement. The struggle has had strong political ramifications because the UGT served as the trade union arm of the governing PSOE, and the CCOO was controlled by the Communist Party of Spain (Partido Comunista de Espana--PCE) and by other communist splinter groups. In the 1978 elections for members of the works councils, the CCOO elected 34 percent of their candidates, compared with the UGT's 20 percent. By 1980, however, the tide began to turn, and the UGT succeeded in electing close to 30 percent of its supporters, having made inroads into CCOO voting strongholds. The decision of a large number of USO affiliates to merge with the UGT also enhanced its strength. In 1982 the UGT managed to edge out the CCOO by a 36 percent to 33 percent margin, and in the succeeding election, held in October-December 1986, it gained a further 4 percentage points, garnering a total of 41 percent, while the CCOO advanced only slightly to 34 percent. The UGT's strength was concentrated in smaller enterprises, whereas the CCOO's popularity advanced in public-sector companies and in the banking sector. In the late 1980s, the CCOO dominated the works councils in all the leading companies of INI, except for the tobacco monopoly. The ELA-STV continued to maintain its position as the single largest labor organization in the Basque region, but it was closely followed by the UGT.

Not long after coming to power in late 1982, the Socialist government became increasingly embroiled in an acrimonious relationship with the equally socialist UGT. To advance its program for industrial restructuring and for the revitalization of the economy, in order to prepare for integration into the EC, the government considered it necessary to enforce wage restraint, to carry out large-scale personnel cutbacks in a number of public-sector companies, to limit social spending, and to permit employers greater latitude in hiring, firing, and laying off workers. In exchange for docility and low wages, workers during the Franco era received virtual lifetime job security, making it practically impossible for employers to engage in personnel retrenchment; however, a free-market economy, especially one linked to the EC, required the elimination of this rigid employment status--a goal toward which the Gonzalez government was gradually moving. Though such measures contributed to the economic boom of the late 1980s, they seriously undercut the standing of trade unions. Furthermore, labor militants were incensed to find that in 1987 company profits greatly increased-- an average of 40 percent--while the government continued to insist on wage restraint. The two-year Economic and Social Agreement, which covered wages and related matters and was signed by the government, employers, and workers, expired at the end of 1986. Thereafter, government efforts to persuade unions to accept a social compact failed because of union insistence on wage increases appreciably higher than those proposed by the government and because of union opposition to further personnel reductions in state enterprises that operated at a loss. The result was that union contract renewals in early 1987 led to a resurgence of labor disputes and to an increase in the number of work stoppages.

Trade unions entered the post-Franco era with great prestige and large memberships. According to the unions, their combined membership totalled 3 million workers. Since then, however, organized labor has steadily lost strength because of rising unemployment and limitations on wage increases. As a consequence, most workers professed sympathy and regard for the unions, but few bothered to pay dues. In the late 1980s, probably fewer than 15 percent of all workers possessed union cards. Nonetheless, a much larger proportion heeded union calls during negotiations for economic agreements and participated in strikes and other jobrelated actions.

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