As many workers in Barcelona can testify, more and more employers are deciding to leave Barcelona for cheaper economic climates. The Mediterranean, once a European haven of low-cost labour, plentiful European Union subsidies, and an Aladdin’s cave of cheap state owned utilities, is now losing out to the far cheaper climates of Eastern Europe as it becomes integrated into the EU. In Spain, the problem is of particular concern for Catalonia which has suffered the most with around 15 multinationals already having moved with the loss of 5,000 jobs. Volkswagen - the biggest employer in the region – has already transferred 10% of its SEAT plant in Barcelona to Slovakia. French manufacturer Actaris is to stop producing electricity and water meters in Barcelona and move to Hungary with the loss of 150 jobs. Early 2004 has already seen the announcement by several multinationals such as Samsung, Hewlett Packard and Philips Novalux that they will move all or part of their operations from Spain to other countries mainly in Eastern Europe. All arrived here offering stability and investment but all are now waving goodbye with the lucrative lure of another enthusiastic welcome in Eastern Europe.

Since the 1950’s, Spain has always been an attractive destination for foreign investors. The country’s rapidly expanding domestic market and Franco’s dictatorship provided a controlled and highly disciplined workforce who were eager post-war consumers. Spain’s own entry into the EU saw trade regulations liberalised further and by the late 1980’s, almost 20% of foreign investment came from the USA alone. The election of Jose Maria Aznar’s Popular Party in 1996 heralded further liberalisations in employment and investment laws and welcomed the dawn of a new domestic and export-led economic boom until their infamous election defeat to the PSOE earlier this year. But that’s where the corporate love affair with Spain could end. Eastern Europe is now set to become “the new Mediterranean” for the business world and with a socialist government now in power, companies will no longer see Spain as such an attractive option. The party has in fact already begun - whilst the growth in Gross Domestic Product of the 12 countries in the Euro zone has languished at a rate below 1 percent this year, Eastern European countries have been booming - Slovakia’s has touched 4 percent this year while the average in the three Baltic States is approximately 6 percent.

The implications could be particularly disastrous for the Spanish car assembly sector which employs 100,000 workers in Catalonia alone. Already here, car components manufacturers Lear and Autotex have lost 20% of their workforces to central and eastern European countries in 2002 and 2003. Usually, companies relocating claim that they are facing revenue losses but those that have moved this year were all showing a profit, justifying their departures by predicting “losses in the future.” But the situation is nothing new – East European accession into the EU simply means that companies will have more bargaining power than ever before.

The case of SEAT in Matorell is illustrative. Volkswagen purchased SEAT from the Spanish government in 1986 on the proviso that the government assume its crippling debts of EUR 1,300 million. By 1993, Volkswagen had managed to plunge SEAT back into debt and so closed a factory in Zona Franca and once again, told the government to pay the almost EUR 300 million redundancy costs. Over the years, VW gained increasing concessions from workers until 2002 when it demanded that its 15,000 employees work nine days’ more than the unions had agreed for 2002 – a move the SEAT workers’ committee rejected arguing they already had to work 39 Saturdays per year. The company responded by moving 10% of its plant to Bratislava, Slovakia. Although the three unions were divided - which for workers in Spain is often frustratingly the case in these situations - the general consensus was that the company was merely using the dispute as a convenient excuse to move to Slovakia where labour costs are 20% less and new EU tax concessions generous. The episode illustrates the already unequal relationship between the multinationals and the government and indicates that things can only get worse for Catalonia. The situation is encapsulated by Antonio Martín Artiles of the Barcelona Autonomic University (UAB): “Accepting more flexible working time means the cost of giving up historic and symbolic achievements of the 1970s. It might temporarily help to maintain employment but will lead to greater instability in employment conditions, with a ‘domino effect’ on other companies.” In other words, the case of Volkswagen should be of concern for all workers in Barcelona.

But the problem is not just isolated to the manufacturing industry? Many office workers now find their jobs at greater risk. One of the problems in Spain is that it has the highest level of workers on temporary contracts in Europe – around one in three people. This makes it very easy for companies to fire at will if they fancy moving east. The problem is compounded in Barcelona by the fact that it is a very transitory place with many foreigners working here for only a temporary amount of time, therefore having little regard for working rights, long-term stability or trade union membership. This is great for companies looking for a range of European languages but bad for Barcelona’s workers in general. For example, in one logistics company contracted to Hewlett Packard, around 70 people will be made unemployed this year as the company moves east. The average age is just twenty-eight and only two of them are Catalan – the rest are mainly a melting pot of Latin Americans fleeing economic disaster at home or young Europeans attracted by Barcelona’s many delights. Everyone is employed on a project-based contract, which can end at any time, and there is no workers' representative body present in the workplace - mandatory in Spain in offices of more than 50 people. Similar situations exist at companies such as American multinational Agilent that employs mainly young foreigners through Manpower on temporary contracts that are getting increasingly shorter. That’s not even mentioning the many “unofficial” companies that operate – often in telesales – that are either unregistered or operate through legal loopholes thus bypassing Spanish law. One young foreigner sums up the situation: “I’ve been made redundant twice in one year – the first moved to India and the second to the Czech Republic. There’s no way of obtaining any sort of stability here and therefore it’s almost impossible to settle.”

Obviously, with this degree of instability, there is little chance of workers organising to defend their work although many young foreigners are not interested in doing so anyway – the jobs are merely a means to an end in order to enjoy Barcelona’s many delights before they return home. This is all very well, but the “domino effect” of such situations should be of concern to all. However, whilst the Catalan authorities and Spanish government could do more to defend workers, there is little they can do without the EU making efforts to maintain similar levels of pay, conditions and employment around Europe. The European playing field will have to be level if everyone is to benefit from expansion equally.

[This article was first published in Barcelona Metropolitan. It was later posted on Nicholas Mead's personal blog, and is reproduced here with his permission.]

Original source: http://www.nicholasmead.com/?p=27