Labor reform in Spain

In Spain, the negotiations on labor reform ran until dawn of Friday June 11. The direct motivation is to pass a reform that would be seen as a signal of confidence in the government, that in turn would expect to ease its way into a negotition to finance the fiscal deficit. As happens during crises, emergency solutions are rarely the best and they leave scars. Why are governments--executive and legislative--sometimes unable to correct evident problems is a key question in political economy. Regardless of the political preference, with long-term unemployment rates above 10%, and reaching sometimes 20%, with low levels of effort and hours worked, with persistent lags in productivity, nobody believed that the Spanish labor market was well-functioning.  A useful reference is the Proposal for the labor reactivation of Spain, available in English, launched in April 2009 by a group of Spanish economists. There are some of the leaders in the profession: Abadie, Mas Collel, Amuedo, Barberá and several more.