Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • October 2021
  • Case
  • HBS Case Collection

The 2012 Spanish Labor Reform: Lifting All Boats or Levelling Down?

By: Vincent Pons, Rafael Di Tella, Santiago Botella and Elena Corsi
  • Format:Print
  • | Language:English
  • | Pages:48
ShareBar

Abstract

Since 1978, Spain had struggled to control unemployment. The country’s labor law was protective of employees hired long-term and companies used temporary contracts as buffers. In 2012, amid economic recession and a 23.6% unemployment rate, a center-right government of Mariano Rajoy passed a reform to liberalize the labor market. The authors of the labor reform argued that it helped to close the current account deficit and recover from the recession. Critics of the reform instead argued that it increased job precariousness and impoverished employees. Others believed that even more flexibility was necessary. In January 2021, Spain was governed by a coalition between the socialists and the extreme left-wing electoral alliance Unidas Podemos, led by the populist left wing party Podemos. Both the Prime Minister Pedro Sánchez, also the socialist party leader, and Pablo Iglesias Turrión, Second Deputy Prime Minister, Minister of Social Rights and the head of Podemos, had promised to repeal the labor law in the electoral campaign of 2019. But not all ministers in the cabinet shared the same view. In addition, the government was applying for funding from the EU to help the Spanish economy to recover from the recession that followed the COVID-19 pandemic. But to unlock the €140 billion in grants and loans from the EU COVID-19 fund, Sanchez had to present a convincing plan of structural reforms to boost the economy and address its structural problems. Would the EU Commission approve Spain’s recovery plan if the 2012 reform were to be repealed? What should Sánchez's government do?

Keywords

COVID-19 Pandemic; Globalized Markets and Industries; Government Legislation; International Relations; Working Conditions; Employment; Labor Unions; Contracts; Social Issues; Public Opinion; Spain; European Union

Citation

Pons, Vincent, Rafael Di Tella, Santiago Botella, and Elena Corsi. "The 2012 Spanish Labor Reform: Lifting All Boats or Levelling Down?" Harvard Business School Case 722-008, October 2021.
  • Educators

About The Authors

Vincent Pons

Business, Government and the International Economy
→More Publications

Rafael M. Di Tella

Business, Government and the International Economy
→More Publications

More from the Authors

    • 2022
    • Faculty Research

    Causal Inference During A Pandemic: Evidence on the Effectiveness of Nebulized Ibuprofen as an Unproven Treatment for COVID-19 in Argentina

    By: Sebastian Calonico, Rafael Di Tella and Juan Cruz Lopez Del Valle
    • 2022
    • Faculty Research

    Small Campaign Donors

    By: Laurent Bouton, Julia Cagé, Edgard Dewitte and Vincent Pons
    • April 2022
    • American Economic Review

    Does Context Outweigh Individual Characteristics in Driving Voting Behavior? Evidence from Relocations within the U.S.

    By: Enrico Cantoni and Vincent Pons
More from the Authors
  • Causal Inference During A Pandemic: Evidence on the Effectiveness of Nebulized Ibuprofen as an Unproven Treatment for COVID-19 in Argentina By: Sebastian Calonico, Rafael Di Tella and Juan Cruz Lopez Del Valle
  • Small Campaign Donors By: Laurent Bouton, Julia Cagé, Edgard Dewitte and Vincent Pons
  • Does Context Outweigh Individual Characteristics in Driving Voting Behavior? Evidence from Relocations within the U.S. By: Enrico Cantoni and Vincent Pons
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College