The unfortunate consequences of protective social laws in Spain

According to Milton Friedman, the problem with socialism isn’t its intentions; the notions of government helping those in need, and protecting the disadvantaged are honorable. The problem is that when implemented, public funds inevitably end up in the wrong hands, and far more people exploit protection than benefit from it.

Consider protective laws in the context of a country like Spain. Amidst a terrible economic decline, Spain could benefit from the startup and expansion of small businesses, in terms of both economic investment and the creation of new jobs. The labor laws in Spain, however, are severely tilted towards the protection of employees, and according to Friedman (and common sense), one would expect this, as a consequence, to ultimately serve as a disincentive to business growth.

I see this almost every single day, including last Friday, when I visited my local barber — a master craftsman who, working alone, has been cutting mens hair in Marbella for more than two decades. As he cut my hair, he told me a story.

About a year ago, in response to demand, he decided to tiptoe in the direction of expansion, by offering styling services to women, and for the first time, hired an assistant on a nine-month initial contract. Her hours were Monday to Saturday, 10am to 2pm.

The first few months went fine, but then things went rapidly downhill.

In once instance, the assistant announcement that she was taking Saturday off to celebrate her birthday. When the barber pointed out that her birthday wasn’t on Saturday, she said that’s true, but anyway intended to celebrate it on Saturday. When the barber pointed out that Saturday was the most important day for building the female side of the business, the assistant said that’s too bad.

As a compromise, the barber proposed that should no women’s appointments be made by Friday afternoon, then the assistant could take Saturday off; otherwise, she would need to work according to the terms of her contract. She agreed.

Friday morning came, and the barber got a call at 10am for a woman’s appointment on Saturday. The barber was cutting a client’s hair at 10:30am, when the assistant arrived to work (30 minutes late). As she walked by, he mentioned the woman’s appointment on Saturday, and that unfortunately the assistant would have to work. In front the barber’s client, she snarled, “You’ve screwed up my birthday party!”

The next morning, Saturday, the girl arrived to work at 10am. When the client arrived at 11am (to have her hair styled for a wedding), the assistant looked at the barber, and simply walked out the door, leaving him in obviously complicated situation.

On Monday, the assistant arrived, and asked when she could take her seven days of vacation due in the first work semester. The barber said, “What? You know as well as I that you’ve already taken those days.” The assistant said, “Do you have a leave form signed by me?”, to which the barber replied, “It didn’t occur to me; I simply trusted you.” The assistant then said, “If you don’t have a leave form signed, you owe me seven days.”

The barber went to see a labor lawyer, indicating that he immediately wanted to fire the assistant, explaining how the girl had maliciously abandoned her post and now was exploiting his trust.

The lawyer’s advice was this: “She would need to abandon her post three times in order to provide legal grounds for termination. But that’s anyway the wrong direction. Believe me, you don’t want to consider a termination. I advise you to wait out the remaining months of her contract, and simply don’t renew. You need to be as friendly as possible; otherwise, you she can seriously complicate your life in labor courts.”

He followed the lawyer’s advice, and is now a very bitter business owner. As he finished cutting my hair, he said he deeply regretted having hired the assistant, and would never, even again consider expanding his business.

This is but one example, but is typical of a pattern I’ve seen over and over here in Spain.

In a different context, it reminds me of the time we threatened a non-paying renter with eviction. The renter looked as us and started laughing, then said (literally), “You obviously are unfamiliar with the process of eviction in Spain. Let me summarize it for you: You’re going to watch me sunbathing at the community pool, enjoying the community facilities that you pay for, for — minimum — one year before the courts evict me. Good day.” And she closed the door.

2 thoughts on “The unfortunate consequences of protective social laws in Spain”

  1. I have a theory that the Spanish mostly hate Franco—on top of all obvious all things—for preventing Communism to flourish there. In a way, it’s a pity it never happened, Spain could’ve been one lesson smarter by now.

    It was brutally taken away from them just before they could taste it, no wonder they romanticize it.

    I am exaggerating, perhaps. Regardless, there is a certain disdain for the entrepreneurial in the country, disguised as welfare.

    I have been visiting Barcelona for years and had a problem understanding why it never became the design Mecca of the world it had all the makings of. The setting, the design scene, the architecture, the vibe, the schools and traditions—they’re all there. You can see great design everywhere—in local shops, clubs, flyers, architecture…

    Yet somehow it is not happening.

    I wonder what role in all this plays the Autònomo tax: €3000 per year for the mere pleasure of being registered as a freelancer—regardless of income and before any income tax. This is probably enough to send small bootstrappers elsewhere and force locals to work for larger companies and collect payment for freelance design work under the table.

    But hey, the authorities are stepping up their game now. I mean, stepping on the little man: http://www.lavanguardia.es/vida/20110203/54109417888/sablazo-a-los-autonomos-de-barcelona.html

  2. I agree we have bad consequences from good intentions but in 35 years we have become a great society, open and welcoming like almost no other . One bad example does not make for a pattern, millions of spaniards work much longer and for far less than other Europeans, that is also part of the truth of our crazy country!! Let’s be positive and understand our history it’s remarkable how far we have come …

    Matt, me encanta tu blog y felicidades por el bronce!

Agree? Disagree? What do you think?