The labor reform in 2012, the absence of parliamentary ratification and, above all, that clarifies certain aspects jurisprudence, will allow companies to reduce personnel costs through:
Reduced wages, workers who are above agreement.
The lower costs of compensation and dismissal.
Compensation for downsizing will be repaid in a shorter time.
Containing rises agreement. In practice will be 0%.
Saving labor costs (social security) for exemptions and rebates.
We could estimate that reducing personnel costs may be around 20% in three years (at the rate of 7% per year reduction). (Hotels in Macon Georgia)
In addition, hotels should negotiate a lowering of prices with suppliers that are intensive in labor companies , suppliers account for 5% of the budget of hotel expenses such as minibus services, security, maintenance, animation, catering, legal services , consulting ... can reduce this overhead around 14% in three years (at the rate of 5% per year) .
The evolution of a hotel with the following structure of income statement might be:
At first glance, it appears that the 2012 labor reform will be a success, increased productivity, but ...
The bad news
From my point of view, the main problem of Spanish companies is not costs, but sales and borrowing.
We had estimated what will happen with the costs, but what about sales? The labor reform will lead to lower SALES in two ways : (Macon Georgia Hotels)
LOSS OF CONSUMER CONFIDENCE: You will increase uncertainty in workers (wages and stability), resulting in a loss of consumer confidence (as consumers are the workers), which will result in a reduction in domestic consumption (Spanish). If the loss of confidence consumption is reduced, saving who wins? banking as usual.
PRICE LOWERED: Like climbing wages, increases inflation (prices) at lower wages, lower prices, which will adversely impact sales of companies. It is expected to go into deflation , something equally or more dangerous to use than inflation.
This drop in sales will affect the entire production chain, both B2B companies (Business to Business) and B2C (Business to Consumer), and logically affect more businesses with greater reliance on the domestic market.
Continuing the Example above the hotel company, assume that:
50% of sales depend on the domestic market.
Because of the loss of purchasing power of domestic consumers, loses 7% of sales in this market, and 3% by declines in prices.
Variable costs, logically decrease as consumption, ie 7% of national consumption, and we assume that 35% of the costs are variable.
The hotel would be the next evolution of results:
Of course, this example is subject to certain assumptions and reality has many nuances that will surely escape, but certainly after this reform, worsening the outlook for companies that depend on the domestic market, confirming what pointed in December 2009.
To see this more clearly, we will propose the following SCENARIO: Suppose that all Spaniards working without charging anything, that is free Would it be good for business? Staff costs would be zero, but nothing sold to the Spaniards , it would only be good for exporters.
CONCLUSIONS
1st) The Spanish companies have an added value problem
My main criticism of the 2012 labor reform is that it has the wrong focus. The reform raises the low productivity as the main problem of the labor market in Spain, and in my opinion, the problem is in the Spanish business sector, where there are still many companies that generate little value added, making no work for all .
Clear examples of "low value-added" we have them in two major sectors of the country, construction and tourism. In the first case, we all remember the amount of real estate that was a few years ago, every street there were several value generated so what? Little. Not to mention promotions homes uninhabitable sites, or pharaonic megaconstructions as airports, conference centers and others, worthless. (Hotels in Macon GA)
To prevent further increase in the number of unemployed there are two options, which basically are the same:
a) Replace companies with low added value for other high added value.
b) converting the companies with low added value in companies with high added value.
2nd) We must increase disposable income and consumer confidence
This labor reform, together with the tax (income tax increase) affects millions of Spanish consumers, to which entry is being given a very clear message "Reduce consumption for tomorrow are going to have less disposable income and also you can stay out of work easier " for years and they will check.
Also separate chapter deserves the personal income tax rate increase, because:
In addition to reducing consumer disposable income,
Rates of 56% for the highest income will scare off multinational certain autonomous territories, as managers of these companies do not think they are willing to endure the excessive tax burden (close to that of the Nordic countries).
In short, to create jobs and wealth, we should answer these questions:
- Why hire entrepreneurs?
- Because they sell.
- And why sell?
- Because there consumption.
- Why is no use?
- Because consumers have disposable (birthday party ) income, credit, trust and products have value.
- How jobs and wealth is generated in a country?
- Increasing disposable income of (event organisers istanbul) consumers.
- Increasing consumer(mammoth ivory) confidence.
- Making products or providing services with high (hotels) added value.
- Facilitating the credit reaches companies with high added value.(cheap area rugs)
The reforms that are making have an ideological character, facing μεσοθεραπεια European gallery, but are impractical, honestly, I'd have been disappointed because I expected something more technical and less political.( μεταφορες μετακομισεις )
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