Tuesday, July 17, 2012

How Europe Can Create Jobs

Wall Street Journal
July 16, 2012

Last week Spanish Prime Minister Mariano Rajoy proposed his fourth round of spending cuts and tax hikes since taking office in December. He is following the IMF-Brussels orthodoxy, but he'd do better if he reversed the labor policies that have led to a 24% jobless rate.

Consider a few examples:

• After Cyprus, Spain ties with Malta for the most public holidays (14) in Europe. The Spanish Workers' Statute also guarantees 22 days of paid vacation annually, 15 days to get married and two to four days when anyone in an employee's family has a wedding, birth, hospitalization or death.

Mr. Rajoy has tried, with only moderate success, to tweak the public-holiday schedule and discourage "bridge" weeks—when, say, the Assumption of Mary falls on Wednesday and your entire staff takes off Thursday and Friday too. But if Mr. Rajoy wants a reform that would also be popular, why not ditch the statute's clause that bars employees from trading vacation time for extra pay? If Spaniards could earn greater rewards for taking fewer holidays, they might eventually want to scrap state-mandated vacations.


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