The Economist, The Financial Times, subhiring and Spain.

Hello, I don't write too much in here, but to those of you who happen to drop by, be advised that I take this blog more like a diary for myself than anything else. But I'm happy if anyone reads it and enjoys himself.

Going into the topic, I', starting to freak out here because I'll get screwed up in my salary and my unemployment benefits. Granted, Spain has problems. Actually it has had problems for 6 centuries now. But I don't wanna pay for them.

It has been said by those newspapaers I have cited in the title that it's neccesary to do a reform in the Spanish labor market. I'm not so sure about it. I think that will things even worse. And the cause is the process know as "subhiring".

"Subhiring" is something alike contracting or consulting, but it goes in all trades. What it really boils down to is to hire company to use an employee. The employee belongs to "his/her" company but actually works for the one that "subhires"him/her. The problem is that for almost any field in Spain, being that construction, programming, or customer care, almost any big company does it. Which means that in any given market, what you have is really X companies that subhire the job to Y companies. Customers pay an amount for a service to those companies, they subhire the work, and that amount has to be slashed between the company the custormer pays to and the chain of companies that subhire the work to each other till it gets to the person/employee that actually performs the work.

I'm a programmer, instead of making 60000 euros, I make 30000, my company gets 30000 from the company I really work for and pays 10000 to the state. Management in my company gets their pay, and my company gets its benefits by slashing my wage so that they make more money. Result, I should be making 50000 euros, but I make 30000 and some guys are making 120000, 90000, and 60000 just for being in my company and being my "superiors". Before anyone starts nagging me... . I have worked for 3-4 years for the same client each time with a period of 1 month between projects, so I have not created much management costs.

So for the Financial Times and The Economist, I'm actually making 60000 euros becuase you compute productivity (more or less) by counting how much my work produces and substracting how much it costs. So, it looks like salaries in Spain are high because producing anything is expensive. But salaries are not high, though producing anything is expensive because there are a lot of people in between my work and what I make that get a slice of the pie.

The real problem is that if I work for one company or even consult for one company and another pays, that's OK. Somone gets some slices of the pie for coordinating my job, and for doing the legwork of the project. But subhiring in customer care, just as an example... . Somebody works for a company that works actually for Prisa as a customer care employee. Prisa instead of hiring her directly and paying her, "subhires" her from her company, pays her company, she does all the work at Prisa building and offices and has Prisa bosses, but gets paid what Prisa paid less what her company gets.

That company wants benefits also. So they lower her salary whenever things are tough.

At the end you get high labor costs but really low salaries because there are lots of persons (all the people in the chain of subhiring companies) that get their part.

One can argue, that those companies actually have expenses by managing the contrating and job hunting. Well, nothing that cannot be solved by an ad in the "Job Offerings" section of a newspaper or the Internet. Or a contracting agency. My guess is that "subhiring" is far more expensive than the agency kind of deal. As a matter of fact, the number one meassure that would surely change the face of the Spanish economy would be to actually and for good forbide the subhiring practice.