Imagine a mandated 2-3 hour break each afternoon in your work day. In the summer this break may increase to up to 6 hours. Envision a minimum of 30 days paid vacation each year. In addition, you get a paid bank holiday off each month too. Christmas bonuses are required in your employment contract. (Yes, your employment is protected by a contract.) But Easter bonuses too!? If you are laid off, visualize the assurance of 45 days of severance for every year you worked for your employer. This may sound fantastic and surprisingly generous. However, a year ago, in Spain, such an employment contract would be considered fairly standard. Yet, in order to remain competitive, the country is being forced into major labor reforms.
International sourcing affords businesses opportunities to capture benefits using the best labor force, in the most ideal setting. In this increasingly macroeconomic situation, as countries compete for business, they are forced to be competitive on a global scale.
At one end of the spectrum are countries with human rights issues, child labor, and limited wages that place their labor pool in dire safety circumstances, and a reduced ability to sustain themselves on meager wages.
At the other end are countries with powerful unions, an exceedingly high number of paid holidays, and complex labor laws that make it difficult and expensive for a company to have flexibility with their workforce. One such country at the latter end of the spectrum is Spain.
Spain boasts very powerful and loyal unions. They have hampered change in the past. But a dire financial situation is driving a force of change by the government. Earlier this year, despite strong opposition, Spain's government pushed through a landmark labor reform bill in an effort to make their country's labor pool more attractive to businesses. Major strides were made such as: 1) Reducing severance pay requirements, 2) The ability to reduce hours instead of firing employees, 3) Bonuses for hiring the unemployed, and more.
The prime minister, Jose Luis Rodriguez Zapatero, hopes these reforms will ease the difficulty and risk of job creation in his country and thereby improve the economy. With the highest unemployment rate in the Eurozone - topping well over 20% - as of August 2010, nearly 4 million people are seeking employment in Spain. While unemployment has risen slightly since labor reforms were passed, seasonal employment fluctuations account for that increase, and the increase for August was lower than the previous year.
Although there is no reason to not be hopeful, whether such changes are going to help the struggling country are largely yet to be seen. Trade unionists are banding together in a couple weeks for a general strike on September 29th to express their outrage. Employment contracts may never go away entirely in Spain, but enhancing the competitive nature of the labor force is most likely an excellent, albeit painful, step in the right direction.
Sample Test Question: Task 1-C-1
When considering a global work force, supply managers should consider the following:
A) Labor skills, labor practices, global marketing, cultural differences
B) Labor skills, labor practices, global marketing, brand management
C) Labor skills, labor practices, brand management, cultural differences
D) Labor skills, labor practices, human rights, cultural differences
Good-bye, Incoterms 2000. Hello, Incoterms 2010. Changes in Incoterms are set to take effect in January 2011. Incoterms originally began in 1936 as a set of common rules to bring legal certainty and simplification to drafting legal contracts. The terms help define responsibility of goods throughout the shipment process, particularly in international trade.
