10

The Transformation of the Employment

System in Spain: Towards a
Mediterranean Neoliberalism?
Josep Banyuls, Fausto Miguélez, Albert Recio, Ernest Cano
and Raúl Lorente

Introduction
Since the first democratic elections after the Francoist dictatorship (20 June
1977), important changes have taken place in Spain. These have affected the
economic and social structure, culture, labour relations, gender relations
and everyday life. The changes have been influenced by both external
factors (globalization, European integration) and internal factors (political
democratization, territorial restructuring, social demands and cultural
changes). This context of deep and rapid transformation in the socio-
economic model must be taken into account in order to understand the
puzzle that is the current employment system. The drivers of these changes
are diverse, as we will see. Our hypothesis is that there have been significant
breaks with the past, but these are not of a radical nature and are instead
combined with significant degrees of continuity.
The socio-economic model of the late years of the Franco system has been
characterized as both unfinished peripheral fordism (Toharia, 1986; Lipietz,
1997) and as a coordinated market economy. Although the Spanish economy
operated primarily as a closed economy, its adoption of an external trade lib-
eralization policy in 1959 led to a phase of economic expansion associated
with the arrival of multinational firms and the start of tourism. This rise in
activity boosted consumption and allowed a period of intensive capital
accumulation. Nevertheless, the economy retained the characteristics of
peripheral fordism: production was mainly oriented to the domestic market
and limited by the high proportion of small and very small firms, wages
were low and unions banned. In addition, the dependency on foreign tech-
nology was very high and skilled labour was in short supply. On the other
hand the state exerted a powerful influence on economic activity, both
direct, through the state-owned firms and indirect, through strong regula-
tion of many activities that frequently generated oligopolistic structures. It
is within these latter structures that the core of Spanish capitalism (banking,

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© Palgrave Macmillan, a division of Macmillan Publishers Limited 2009
248 Spain: Towards a Mediterranean Neoliberalism?

utilities and so on) was, and still is, located. In this sense the old Spanish
model can be also classified as a coordinated market economy.
However, these two classifications of the characteristics of the Spanish
‘variety of capitalism’ relate only to the nature of the business system, which
is not sufficient in itself to characterize an employment model. In terms of
social structure and welfare regime Spain was in fact clearly a southern coun-
try (Karamessini, 2007): the family played a central role providing services,
and public services (including education and health) were underdeveloped.
Also, one of the main effects of this social model was a significant gender
division of labour, associated with low female participation in the labour
market. Overall, the model combined economic growth with poor labour
and social conditions and very high inequalities by class and gender.
The forces of change have come from different directions. On the one
hand, with the arrival of democracy, strong social movements demanded
improvements in social conditions and reductions in inequality. There was
a general demand for the expansion of public services (health, education,
urban renewal, pensions and so on) that put pressure on the new democratic
institutions and generated one of the drivers for modernization. On the
other hand there were pressures to liberalize the economy and to change
both product and labour regulations, stemming from the increasing inter-
nationalization of the economy and its integration into the European
Union. While in some respects economic liberalization may promote pro-
ductive modernization, in others it acts in contradiction to the demands for
greater equality. The overall direction of change is the outcome of the inter-
action of these contradictory forces (and the inertia of old institutions and
behaviours), thereby rendering it very difficult to characterize the current
Spanish socio-economic model by a single reference. In reality, as we will
show, while much progress has been made in both welfare and employment
outcomes, many of the same institutions and the same economic and social
problems remain. Economic progress has been apparently particularly
strong over the past ten years but there are question marks over the sus-
tainability of the model. In the following sections we analyse the puzzle of
the current employment model, focusing on the main trends and the driv-
ers that explain them.

Changes in the productive structure

Changes in the Spanish production structure have been taking place over
the last three decades, explaining much of the character of the new jobs that
have been created. In recent years economic development has been mainly
in labour-intensive activities with low productivity. The other key factor in
the Spanish employment model is labour management flexibility. The diffi-
culties experienced by many sectors in establishing a new accumulation
model have increased the pressure on labour costs and led to employers