WHY IT'S A PROBLEM FOR SPAIN to have such a rigid labor system, with too much labor protection and expensive layoffs:
The airport café was typical of my entire journey in Spain. Only one person often staffed hotel front desks. I spent two days at a small hotel in Seville and never saw anyone at reception. Unable to check out, I had to leave without paying. (Thus that hotel comes highly recommended.) I learned to ask for a check at a restaurant at least 20 minutes ahead of when I needed to depart. With one waiter often responsible for 15 or more tables, getting his attention felt like winning the lottery. And at rush hour on a busy Friday evening in Madrid, the high-speed rail line had a mere handful of ticket windows open, creating endless lines and more delays. So much for the benefits of high speed.
Everywhere I went in Spain, I seemed to be wasting 10 minutes here and 20 minutes there due entirely to understaffing. That may not sound like much, but add that up over the course of a week and I lost tons of time that I would rather have applied elsewhere, to writing my articles, or enjoying my time in Spain, or spending more money. The dearth of staff also lowered the quality of the services provided throughout the country, something I found surprising for an economy so dependent on tourism. People in Spain don't seem to mind the delays and bottlenecks. They consider them just an inevitable part of daily life. But there is an economic cost to all of this inefficiency. If I didn't have to wait to pay for my chicken sandwich at the airport, maybe I would have gone off to buy a magazine or something else. But no time for that.
It's not that there aren't enough available workers in Spain. With an unemployment rate at a staggering 20%, there's no shortage of people who hotels, restaurants and other companies could hire. But they don't. And that isn't just a factor of the current economic downturn. Unemployment in Spain is traditionally higher than in the U.S. Even during the so-called boom years of the mid-2000s, the unemployment rate never sank below 8%.
The reason is that employers don't want to create jobs. It's simply too costly. Blame the country's overly strict labor laws. Mandated severance payments – of as much as 45 days per year of service – make laying off employees prohibitively expensive, and that makes firms reluctant to hire them in the first place. Managers do have the option of taking on temporary staff on fixed-term contracts. If those workers get dismissed, they don't receive the same giant severance payments as permanent employees, allowing companies to downsize at reduced cost. But that choice has its own downside. With workers around for only a short time, they have little commitment to their jobs, and employers have even less reason to train them properly. That affects company performance and competitiveness.