Unions reopen debate on submerged employment in Spain

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Trade union observations on the Government's Employment Plan, issued in September 1997, and an official survey by the Centre for Sociological Research have reopened the debate on "submerged" or "informal" employment in Spain, this time with respect to employment and labour relations. Whereas the trade unions regard such work as one of the keys to increasing employment, for the employers the debate centres above all on its economic aspects.

Following the publication of the Government's "Employment Plan" in September 1997 (ES9709222N), the trade unions have reopened the subject of "submerged" or "informal" employment as one the factors to be taken into account in solving the employment crisis. The general secretary of UGT, Cándido Méndez, emphasised this subject at a public meeting when he criticised the merely fiscal treatment that the Government wishes to give to the issue of limiting overtime. A recent opinion poll by the Centre for Sociological Research (Centro de Investigaciones Sociológicas, CIS) that included this subject has also contributed to the debate.

Submerged employment has been a recurring theme for trade unions since it came to the forefront as an economic problem in several European countries in the early 1980s. But whereas the trade unions (at least in Spain) then tended to stress the economic consequences of this illegal activity or its impact on working conditions, today they are discussing it in terms of quality and quantity of employment

Volume of submerged employment

Along with Italy, Greece and Portugal, Spain has one of the EU's highest rates of submerged employment, though caution must always be applied when speaking of a phenomenon that is so difficult to measure. A survey shows that in 1986 the proportion of hidden jobs was around 20% in Spain. According to sectoral or regional studies, in the second half of the 1980s this phenomenon decreased as precarious employment increased. But trade unions and independent observers state that in the last few years submerged employment has increased, though sometimes in the guise of special types of contract: part-time contracts, apprenticeship contracts, work and service contracts and so on. However, totally hidden employment also seems to be on the increase, and is used by many companies to confront strong competition. Public opinion is also concerned at this increase in recent times, according to the survey carried out by the Sociological Research Centre.

Social partners and public opinion

The trade unions differentiate two types of submerged employment. The first type consists of jobs that are totally hidden and thus involve precarious wages and working conditions. If these jobs were detected in small companies by labour inspectors, then many of them would simply disappear. The unions are aware of this risk and support measures of a type that can realistically encourage their "appearance": tax incentives, a certain tolerance during the initial launch of a new company and so on. However, there should still be a certain amount of rigour in inspection.

The second type of submerged employment is a consequence of company strategies that have the effect of hiding employment either partially or temporarily. This kind is the most common nowadays and it may take several forms: a person contracted part time does work up to the limit of a full-time job, or someone who is contracted full time increases their working day with hidden overtime; another possibility is that a person is contracted for six months or one year in the company and then continues working unofficially, perhaps whilst receiving unemployment benefit which allows a lower salary to be agreed.

In all these cases, state the unions, hidden employment is preventing the creation of part-time or full-time jobs for other people. Therefore, over and above the question of working conditions, hidden employment must be approached as a source of new jobs. Furthermore, one should not forget the poor working conditions and in particular the high accident rate associated with hidden employment .

Employers, for their part, tend to use two types of argument. Companies that take advantage of this type of employment tend to lay the blame for the situation on the tax burden, which makes it difficult to survive in a very competitive world. Companies that do not use this type of employment tend to accuse their colleagues of unfair competition. Neither employers' nor labour organisations are very inclined to speak of hidden employment in terms of jobs. They refer only to economics, taxation or competitiveness .

Wary of being accused of interventionism, the Labour Administration has always been reluctant to approach this topic. Only a few local authorities in Spain have attempted to take action. Furthermore, the current labour administration is even more reluctant than the previous one, which is a cause for concern for the unions because accusations of illegal practices involving employment and working conditions are still common.

However, this varied debate reveals the social context surrounding the phenomenon under discussion. For more than 80% of the sample interviewed by the Sociological Research Centre, the submerged economy is a real problem in Spain, though almost half of the interviewees stated that: "at bottom the submerged economy is not so harmful because it allows some people to maintain the income that they need, and it allows companies to operate."

That is to say, public opinion is aware of the problem, but is highly tolerant towards it. However, the interviewees then stated that the great beneficiary of the submerged economy is the company that offers illegal work and that the benefit is mainly economic .

Commentary

We are here faced with a phenomenon that is deeply rooted in the contractual relationships in Spain, and therefore tends to be viewed with great tolerance by society. This tolerance reduces the chances of adoption of the proposals suggested by unions and certain employers. Today more than ever, submerged employment has two serious consequences for work: firstly, it hinders the creation of jobs; and secondly, it encourages unbalanced industrial relations, since the illegal situation prevents the workers involved from claiming even minimum rights. The conversion of such work into proper legal contracts seems to be an essential objective whether considered from the viewpoint of competitiveness, solidarity or equality . (Fausto Miguélez, QUIT)