No Easy Answers

It was hardly the kind of New Year's celebration that Spain's King Juan Carlos had in mind. Early last week 3,800 workers in Madrid's rapid-transit system called an illegal strike, leaving the capital without subway service and causing giant traffic jams. The strikers demanded half of a recent fare increase as a $600-per-person wage raise. Thousands of workers in other industries staged sympathy demonstrations that police broke up with tear gas.

Army railroad engineers were called in to operate some of the idled trains. The fledgling Cabinet of Premier Carlos Arias Navarro threatened to draft the strikers into the armed forces, thus making them liable for courts-martial if they disobeyed back-to-work orders. At week's end the subway workers settled for an immediate $455 raise and a promise of further negotiations, but they could go out again on Jan. 19.

The subway strike was the most dramatic example so far of the growing militancy of Spanish labor since the death of Francisco Franco in November. And labor unrest is compounding the economic woes the new King and his government have inherited from the dictator. After spectacular gains in the 1960s and early '70s, Spain's economy is now afflicted by a 15% inflation rate and rising unemployment. To bring about a recovery, the new government must walk a wobbly tightrope between the forces of left and right.

Part of the trouble came about because Franco in his last years did not live up to his parsimonious image. Eager to avoid social unrest, the dictator's economic counselors allowed officially sanctioned unions (sindicatos) to win wage increases--30% in 1974 and 28% in 1975--that far exceeded government guidelines. Spain's new Finance Minister, Juan Miguel Villar Mir, recently confessed to the Spanish Parliament, "In 1975 we created our inflation entirely by ourselves."

Franco cannot be blamed for the recession that has engulfed Spain along with the rest of the industrialized world, but he had no program to combat it. Investment in industry fell 10% last year, and by official estimate national production rose a bare 1% (by some outside estimates it declined 1%). About 700,000 Spanish workers, or 5.4% of the labor force, are jobless. Another 8% or so have had to seek work abroad, and other European countries are now telling their "guest workers" to go home. Rising oil prices have exacerbated Spain's already unhealthy payments deficit. Pressure is mounting for a devaluation of the peseta, which would mean higher prices for imported raw materials and thus more inflation.

Illegal Unions. In order to revive its economy, Spain needs an infusion of investment capital, but it is unlikely to get it until inflation is brought down. To that end, Villar Mir now says, "salaries and wages must rigorously adjust their expansion to increases in the cost of living." But that policy is easier to state than follow.

Wage contracts affecting about 1.5 million workers expired at the end of the year, and in some major industries negotiations have been fruitless. Some of the biggest companies involved are strongholds of clandestine unions, which have been gaining strength and are sympathetic to Spain's equally illegal socialist and Communist parties. Last month the clandestine unions staged a general strike that idled more than 75,000 workers for two days.

To keep peace, the Juan Carlos regime must mollify the labor force. Since the government cannot afford to let workers win inflationary wage boosts, the betting is that it will move to legalize the nonofficial unions, which will surely anger the right-wing elements that still wield major power in Spain. For the new regime, at the moment, there simply is no easy way out.

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