Political Climate

For many centuries, Navarre has defended its right to self-government, fiscal autonomy, political systems and institutions. Today, the historic privileges of the Chartered Community of Navarre are part of the Spanish Constitution. Navarrese citizens have the same rights, freedoms and basic obligations as other Spanish citizens.

The Parliament represents the people, exercises legislative powers, approves the budget and finances, and stimulates and controls the government. The Government, or executive branch, consists of the President and the ministers. Their function is to establish policy and direct the administration of the Autonomous Community.

Because of its autonomous status, the government can react to industry's needs with flexibility and speed. In fact, accessibility to government decision-makers is an advantage often cited by industrialists. Says Javier Chacón Unzué;, managing director of TRW's Pamplona plant: "The managers feel that if they have a problem they can call for support. The government reacts and makes decisions very quickly. For example, if you need help for investment you can get an immediate decision. There is high receptivity and a sense of urgency. The company managers find that if their connections are good and the action rapid, they can avoid many, many problems."

The government supports economic development in the region on two fronts. First, it is flexible in its response to new investors, providing them with tailor-made solutions to their infrastructure needs and with economic and financial support during the initial stages of business launch. Second, the government encourages mergers, buy-outs, capital increases and other forms of cooperation between local companies and overseas investors.

Labor Law

The Spanish labor system is notorious for its rigidity. Recent reforms chip away at the inflexibility, and the system is becoming noticeably relaxed.

Employers associations and unions this year signed a national agreement to liberalize Spain's labor laws. The unions scaled back their demands for severance pay rates. In exchange, employers accepted a new system of four-year renewable employment contracts for first-time job seekers and for the long-term unemployed. This should help Spanish businesses reduce the costs of layoffs, which have been the highest in Europe and discouraged hiring.

There have been many other improvements in recent years. The major trade unions and employers associations in 1994 signed an agreement, under the auspices of the government of Navarre, aimed at increasing productivity, encouraging investment and employment, and promoting employee training.

Legislation introduced by the Spanish government in 1994 and 1995 allowed increased flexibility in working conditions. For example, employers may schedule their work calendars according to company needs. Annual working hours may be scheduled in a variable manner to meet fluctuations in customers' demands. Overtime costs need no longer exceed normal time costs. Employers are given a freer hand with respect to changes in working conditions and work assignments.

Layoffs: Spain is noted for high severance costs when workers are released. But, like other improvements in labor law, the maximum cost of severance today has declined by 40 percent. The new labor agreement enacted last year makes Spain compatible with other European countries.

Employers may justify lay-offs for reasons of organization improvements and market demand. Procedures for job termination have become much simpler, reducing bureaucracy and government approvals.

"The unions now realize we have to compete on flexibility and the changed legislation is very promising," says José Zugaldia, Axle Unit Business Manager for Eaton's Pamplona plant.

Overtime: Voluntary. If paid, overtime cannot exceed 80 hours a year. Overtime rate is not less than the normal hourly rate.

Public holidays: No more than 14.

Annual vacation: 30 calendar days.

Temporaries: Workers may be hired on a temporary basis, and, in fact, many employers in Navarre make liberal use of this type of staffing. Justifiable circumstances include services required for an uncertain duration, staffing for a production overload or backlog, filling in for absent employees or new business launches.

Labor costs: Labor costs in Navarre's industrial and service sectors are slightly lower than the Spanish average, which, in turn, is about 20 percent lower than the European average.

Work ethic: To understand why the Navarrese are so dedicated in the workplace, it helps to review Navarre's traditional cultural influences on the work ethic.

Explains Javier Chacón of TRW: "This is historically a matriarchal society, with a farm-based work ethic, and men have had the freedom to concentrate on work. If you arrive home from work early, the wife, the children and maybe the mother-in-law look at you and ask if you are sick. In the family community, they understand that you go to work at 7 or 8 in the morning and you don't come home until sunset. The mentality calls for work. You are not a proper person unless you work. In other words, people here are different. This is an important factor for Navarre."

Labor negotiations: Yet another quality of the Navarran character impresses Chacón. He came to Navarre from a neighboring region and found a big difference when negotiating the labor contract.

"You can enter directly into negotiations," he says. "From day one everybody at the table knows what everyone else wants. In other European countries, you may speak for days and usually you never tell what you want because people are afraid to face the issues. Here, negotiations are simpler because you can come to the point immediately and from this you can reach agreement quite quickly. You can also speak bluntly -- you don't have to dance around a problem in Navarre. Navarrans believe communication and flexibility are essential to doing business."